Amendments Nos. 16 and 19 are related and may be discussed together.
Trustee Savings Banks Bill, 1989: Committee Stage (Resumed).
SECTION 17.
I move amendment No. 16:
In page 15, line 23, after "(4)" to insert "subject to section 18".
It was with pleasure that we waited seven and a half minutes for the Minister to join us, I would like that to go on the record. There is reasonableness on this side of the House. I hope that is a precedent from the other side in future.
We are on section 17, amendment No. 16 I should like to speak on amendment No. 19 which is related. I should like to bring the Minister back to the discussion we were having shortly before 1.30 in relation to section 17 and the whole thrust of this section, where there is no detail of the actual procedure for the appointment of trustees. My amendment No. 19 attempts to deal with this serious omission in the Bill. We also discussed earlier today the apparent fact that once a trustee is appointed at some stage over the age of majority I believe, if we have to get into specific ages, he or she effectively has a life tenure as a trustee until for some reason when that person reaches the age of 70 he or she is no longer competent to be a trustee.
We must question seriously what has been referred to by other Senators as this age-ism that is creeping into our legislation generally. I do not think anyone should have tenure for life without strict conditions governing the situation. They may be re-elected or reappointed but not automatic tenure for life. I would like the Minister to address that, which would appear to be a tremendous weakness with this section. I would also like the Minister to indicate to me why once a trustee reaches the age of 70 he or she becomes non compus mentis or a doddering fool, if we could resort to the vernacular. I know as many doddering fools at 60 and maybe more than I do of 80 years of age. There is many a wise octogenarian around with plenty of time on his or her hands. That person has completed their main job of life, be it in a professional sense or in a personal family sense, and has time on his or her hands. We are excluding all these wise, older people from our society, many people who continue to make a tremendous contribution. At the same time we are setting up a system whereby an incompetent 60 year old, who effectively has tenure until they are 70, cannot be removed unless they do something fraudulent. I would like the Minister to address very seriously this issue which concerns far more than those of us in this House. Much concern has been expressed elsewhere about this section. Subsection (1) of my amendment, No. 19, which I would like inserted on page 15 before section 18 reads as follows:
In page 15, before section 18, to insert a new section as follows:
(1) Every trustee (other than a trustee appointed to fill a casual vacancy) shall, unless he sooner dies, resigns or becomes disqualified, hold office for five years from the expiration by effluxion of time of the term of office of his predecessor.
That is a point I would like the Minister to take on board. He has been quoting precedent, the necessity to have all these financial pieces of legislation moving down the same road in relation to these matters. I have lifted this section from the Central Bank procedure and I have imposed the word "trustee" for "director" and so on. The procedure is exactly the same. I am asking the Minister to take on board what I am suggesting.
I go on to request the Minister to include subsection (2) as follows:
That every trustee who is appointed for a purpose other than filling a vacancy amongst the trustees shall, unless he sooner dies, resigns or becomes disqualified, hold office for five years from the day as on and from which he is appointed.
I am not suggesting at all that they be not eligible for re-appointment, re-election or for selection again because according to what the Minister said this morning the trustees will continue to self select. Some of the Members were not too happy about that but at least we now know what is intended.
It was not in the Bill how the trustees were to be appointed. The Minister told us this morning that they will continue to self appoint. That is questionable and it is different also to the procedure that is used among the other financial institutions. So much for your precedent and your level laying field. In any case, at least we now know what is to happen.
I am suggesting that the self appointment last for five years and that the person again comes up for re-appointment. There should be a way of re-issuing the appointment for five or six years or, if the Minister feels another period would be appropriate, I am open to persuasion. On an interval basis trustees should come before the board to be given the imprimatur for another period or if there is reason for believing that there is some type of incompetence not to have their appointment validated for another term.
There are major problems when we take into account that the Minister has not detailed the actual procedure for appointment, that, barring fraud, he is giving people life tenure or at least ten years, until they are 70, that the is insisting that the number of trustees be reduced to ten and that even with amalgamations — as I said this morning, the number will have to wither over time down to ten — there will be the least competent people sitting it out and ensuring that for the next number of years the trustees will be totally unrepresentative of the local community and will not have the broad breadth of experience which is essential.
After all, the whole purpose of a board of trustees is to give confidence to the operations of the bank. You just have to look at the profile of any board to get a feeling of the particular business, company or institution concerned. You judge the competence of a particular outfit or company by those at the top table. If we are to have a top table of the least competent septuagenarians or as near to it as makes no difference who are sitting it out because there is nothing else to do until the numbers come below ten, you are not presenting the whole principle of a trustee savings bank in the best light. You are certainly not doing them any justice or representing them as they should be represented. Certainly when it comes to a level playing field, given the situation that exists with boards, banks and other financial institutions, the Trustee Savings Bank is being put at a major disadvantage relative to the other financial institutions.
The third point of my amendment is that I am requesting that a person appointed to fill a casual vacancy in the office of trustee shall hold office for the residue of the term for which the trustee whose death, resignation or disqualification created the vacancy, would have held office if he had not died, resigned or become disqualified. This is lifted directly from the equivalent procedure in the Central Bank Act. I ask the Minister to accept my amendment. He may want to change the language if he feels it is not 100 per cent appropriate. I feel it is appropriate. Above all we should ensure that we do not have tenure for life because if there is incompetence there has to be a system through which the Trustee Savings Bank can remove incompetent people. Particularly with the reduction of the number down to ten, it could be many years before more competent people with a broader range of experience can be included on a board.
I would like to support the main burden of what Senator Doyle has said. It is particularly appropriate that this appeal for respect for elder statesmen should come from the Seanad which through the Roman period was a place in which the views of the aged and the worldly wise were treated with very considerable respect. It seems to me that there is an element of ageism in this. I am very glad that Senator Doyle has picked up and reused, this very valuable phrase.
In conversations off the record and in another section of this House with members of the Government I got the clear impression that this was not a matter of real principle and it really was not something to which they felt they have got to nail their colours very firmly to the mast. It is something that is quite important because it could deprive the Trustee Savings Bank of the services of people who have a considerable body of experience and who also have time at their disposal to make their services available free of charge.
I understand, though I could be quite wrong in this, that the trustees of a trustee savings bank do not receive remuneration and particularly, that they do not receive very large degrees of remuneration. If this is true this would be something that would indicate that it is a more appropriate post for somebody who has already earned his or her money and does not require that the time should be spent in a way that is directly financially profitable to that person.
There is something slightly ludicrous about the Seanad passing a regulation, which means that it is not appropriate for somebody over the age of 70, to take part actively in the commercial life of an important financial institution, considering that this very morning I received a circular dealing with the acts of personal accident claims. My attention was drawn to the fact that were I over 75 certain things would happen, that were I over 80 certain things would happen, so apparently it is quite plausible, quite reasonable for people over the age of 75 or over the age of 80 to legislate but yet those very legislators themselves appear to believe that there is a lower level of competence existing in the general community. This is an illusion from which I am glad to say I do not suffer.
I may also say that I spoke to a Member of the Dáil at lunch time. I was explaining this situation to him and he said he agreed with me absolutely, that his father is a prominent member of the Dublin Port and Docks Board, that he is over 80 and takes a very active interest in the board and that his view is highly regarded.
Acting Chairman
Is the Senator speaking on section 18?
Amendment 19. Is that all right?
Acting Chairman
Yes.
I do not have a copy of the Bill in front of me but I have a photographic memory so I am consulting it rather than the documentation. I feel that this fact which I adduce as evidence, in other words that a respected member of the community who happens to be over 80, is regarded as sufficiently competent to take a very active part in the discussions of the Dublin Port and Docks Board, which has at its disposal and within its responsibility sums of money, many hundreds of millions of pounds, does not seem to me to be an unreasonable request that this matter of an arbitrary age limit should be reconsidered by the Government. I stress the fact that age limits are arbitrary and I felt this in legal terms for some years. For example, in a parallel case with regard to the question of consent in criminal matters, have always felt that ages of consent were dangerous because they introduce an arbitary cut-off level. Instead, what should be introduced is the principle of consent to be judged by a court. What we are talking about here is not somebody's calendar age.
The Minister should be concerned about the principle of competence.
I do not wish to be insulting to the Minister or to the parliamentary draftsman but it is a slightly sloppy way of doing things. I know the intention is to get at competence but I do not think that it is reasonable to assume that competence suddenly ceases on one's 70th birthday. I shall observe the next occurrence of this phenomenon and I shall hungrily await a person of my acquaintance approaching their 70th birthday and attempt to ascertain the precise hour of their activity so that I can watch this phenomenon as it occurs. I very much doubt it will——
We would like your report.
I will present a full report to the House, I am making the point in a humorous way and I am glad to see it is being taken in good part I feel that the nub of the matter is the principle of competence and not the calendar age of the person. I appeal to the Minister to review the situation.
I would have to say that I feel we should be in the debt of Senator Doyle who has put down another date which is also arbitrary. I do not really believe she means 75 years. I am sure this was a device to allow the matter to be properly ventilated in the Seanad.
Could I just mention the fact that matters dealing with the appointment of trustees and the removal of trustees are dealt with in the Second Schedule. I presume when the Trustee Savings Banks Bill has passed all Stages there will be consultation with the Central Bank. I ask the Minister to comment on that.
It occurs to me that the debate we had this morning on the worker-director situation could be covered by the Second Schedule, that the bank could decide that it would have one or two worker directors. The 70 age bracket is precluded as a result of specific reference in the Bill. It is no harm to refer at this stage to the Second Schedule because it covers matters that are provided for by the rules of the Trustee Savings Banks. One of them is the manner of the appointment and the removal of trustees of the bank.
I wish to apologise to the House for delaying Senators for some minutes. I was assured that nothing would happen with this Bill until 5 p.m. I was tied up with another Bill in the Dáil until 5 p.m. and I came to the Seanad immediately afterwards.
The Minister is forgiven.
In fairness, I would like to say the Minister was positively told to be here at 5 o'clock. That was the appointed time.
Section 18 specifies that a trustee shall cease to hold office at 70 years of age. Senator Doyle wants a limit of five years in the tenure of office of trustees after which they would presume to come up for reappointment. She also wants the 70 years age limit increased to 75 years. I have listened with interest to her excellent contribution and also to Senator Norris's excellent contribution. I find a conflict between their earlier contributions and the situation now in that earlier on they seemed to be suggesting that trustees were appointed for life and nobody could remove them and now we have tried to put some limit on their tenure of office on the age side. We have also put a limit by making sure that the trustees board would consist of no more than ten people. At the moment some of those boards consist of up to 32 people so we are limiting the number. We are going for a movement and change on the boards, which senators were suggesting earlier on but now we seem to be at opposite ends.
We are proposing to continue the present system subject to the modifications I mentioned: the Central Bank consent to new trustees and an age limit of 70 years. Should it prove necessary at a later date, the Minister will consider amending the Second Schedule under section 16 (2). Should the Trustee Savings Banks convert the company status under section 57, then the normal company procedures regarding directors will apply. I consider that 70 years of age is an appropriate limit. I appreciate what Senator Doyle says. Could I repeat again her non compos mentis argument with which I can readily agree. That is an individual matter and we cannot generalise on it. It is not to imply that any trustee who passes 70 would not be capable of doing a good job. However, it is the limited means of ensuring some turnover of trustees without drastically changing the present system and something which the Senators seem to be suggesting earlier on today.
As the Bill stands, existing trustees subject to a maximum of ten would become trustees of the Trustee Savings Banks to which a licence is being granted under the Bill. Such trustees would remain in situ until they retired, reached 70 years of age, resigned, because disqualified under section 19 (2) which involves bankruptcy, making composition with creditors or had liability for any deficiency in funds of the bank caused by omission or neglect in relation to the rules or certain requirements of the Central Bank under section 22 of the Bill, or were convicted of fraud or dishonesty. Other than in the above conditions the initial trustees remain in office unless they do not comply with the rules. In this we are continuing the existing situation, namely, making minimum amendments. If a person becomes seriously incompetent, it will be possible under the Second Schedule, which includes the proposed rules for the Trustee Savings Banks, to take the necessary action to remedy this situation.
I hope the information I have given to the House can put the Senator's minds at ease and can find a balanced overview of their desire to have fresher thinking on boards of the Trustee Savings Banks, respect the contribution made by existing trustees and that there would be a reasonable turnover to ensure that there is a genesis of new thinking on the boards of the Trustee Savings Banks to ensure they are able to compete in a modern financial climate. I trust that with that, Senators will be able to agree to this section.
Maybe it is the hour of the evening or the length of time we have been talking today but I did not make myself clear and for that I apologise but likewise the Minister's contribution is not too clear to me, particularly the interpretation of what I said and what Senator Norris said.
I will try to get to the moot point. We pointed out this morning and again this evening that as the Bill now stands a trustees who stays within line is there until the age of 70. I do not think that is a good thing. I do not think anyone should have an automatic entitlement to any position for life. That is why I am suggesting they come up for reappointment every five years as happens under the Central Bank Act. The Minister has been quoting procedure and precedent to us all morning. I am asking him to continue. He has used that as his defence for not accepting other amendments. I am now trying to stay within precedent and treat the trustees as their equivalents in the other banks and financial institutions are treated in other legislation.
I do not want anyone to have an appointment for life regardless of what impression I gave this morning. I would much rather a competent, wise 75-year-old than a blundering idiot of 40. We need a type of gentle procedure for removing people after five years, ten years or whenever their useful contribution are over in terms of being members of the board of trustees of a trustee savings bank. That is why there should be a five year period of office, and let them up for re-election again and reappointment. You can reappoint the good, competent trustees. You can say "Thank you very much" and give the gold pen to those who are making no contribution or are incompetent. There is no problem at all. There is no reason at all why a very bright, experienced 75 year old with time on his or her hands should not stay on the board of trustees. There is no reason why the board of trustees should not have a means of getting rid of an incompetent 40-year-old. When you think of it, a trustee appointed, say, in 1990, next January or February, at the age of 20 could be still on the board of trustees in the year 2,040. Things will have moved on very fast and changed. Very few of us will be capable of a sustained commitment or contribution to any board, barring the very bright and brilliant person specialising in a particular area, for 40 odd years. I do not think any of us should be left in the same position for 40 years. There will be another generation coming up with different breadth of experience and qualifications. Times will have moved on. Europe will be different. The whole world will be a totally different melting pot in 40 years time. Yet some of these Trustee Savings Banks will be stuck with trustees whom we appoint now until the year 2040 and will not be able to get rid of them, regardless of the Second Schedule.
I think Senator Fallon for his reference to this Schedule, which I note. I accept that there may be room for expanding this debate under that Schedule. I think on the section we are talking to at present section 17, we should include here the procedure for appointing trustees, the procedure for removing them and the procedure for reappointing them within a five or six year term as is provided for in the Central Bank. I will talk again in relation to the 70 year age when we come to the next amendment. We are all confusing two amendments slightly here at present, because they are connected. So you will bear with us on that, a Leas-Chathaoirligh.
Notwithstanding what the Minister said this morning, which concerns me greatly, I think he is not in the frame of mind to take on board any amendment, much inclined as he may be to the substance, because he really does not want the trouble of the matter having to go back to the Dáil. That worries me in relation to the whole principle of what we do here in the Seanad. We could close our books and go home now if that was to be accepted as the true feeling of how the Seanad should be treated. I feel, however, it was only a slip this morning and not a true reflection of what the Minister considers to be the worth of the Seanad and of the Senators' contributions. I appeal to him to take on board the system whereby, given that ten trustees will be the most they will be allowed to have — although some have 35 — at present — it will be a long time before the 35 withers doen to ten through natural ailling, if I may use a slightly vernacular expression. Which ten would be left in ten or 15 years? Perhaps the least suitable ten. There would be no way the board would be able to remove them and bring in new, fresh ideas or different experience. I appeal to the Minister to respect the point I am making here. It is extremely important.
The arguments advanced by Senator Doyle are very persuasive. I share her concern that perhaps there may be the administrative difficulty that the Minister, or indeed the Government, may not wish to have the bother of going back to the Dáil, I drew the attention of the House to this with regard to the Derelict Sites Bill which we were discussing earlier on. This is a strong feeling in the Seanad. Very often for reasons of administrative convenience, amendments which are well intentioned and generally well received by Ministers of the Government are not taken back to the Dáil simply in order to avoid little problems of that kind. I hope that is not the case, but I strongly suspect that it is.
As I say, Senator Doyle's case is very cogently argued. The Minister is a little disingenuous. He used phrases like, for example, that this procedure whereby people topple off the board of a Trustee Savings Bank at the age of 70 ensures a reasonable turnover. It does not. It shows a turnover, but the use of the word "reasonable" is not logically sustainable, because it may very well be the most competent person on that board who reaches age 70. It is arbitrary, capricious and smacks of ageism. There is no doubt in my mind that Senator Doyle is perfectly correct when she says that what she opposes is the granting of a life tenure for people up to the age of 70 from the date of their appointment. Clearly, a five yearly rotation of sections to the board would ensure a turnover, as would the age limit, but there is this difference that it would ensure an equitable and, therefore, a reasonable turnover.
I welcome the fact that both Senator Fallon and the Minister have introduced this question of the Second Schedule. That is quite important. There clearly are advances in this Bill. I understand the Minister to have said that under the Second Schedule a trustee can be removed for incompetence. This is not the case? It is the case?
It is not spelled out.
Perhaps the Minister could clarify that. It seems to me that this would solve the question of a person becoming incompetent through age. If that is the case, then there is absolutely no reason for an age limit. It is clear that the requirement of a five year turnover would legitimately meet this worry. I am not being provocative or coat trailing when I remind the Minister that a distinguished former member of his own party, President Éamon De Valera, was considered competent by a considerable majority of the citizens of this State to assume the office of President and continue in that office until he was nearly 90. I wonder if we think that somebody is competent to be President of the State and not competent to be on a board of a Trustee Savings Bank at the same age. That would be a very dangerous notion for a republican party to entertain because it comes perilously close to the notion of an empire, or of a God king who is separated by special qualities from the rest of us mere citizens. I do not imagine that Fianna Fáil, the somewhat constitutional and always republican party, would take that on board with any great ease. I accept that the Minister is intending to——
Acting Chairman
Is this relevant to the trustees?
Absolutely. I am suggesting that were it possible, President De Valera, were he still alive even at an incredibly advanced age——
He would be in the Bank.
——would probably be too canny to be a member of an nonpaying non-remunerating body. I am sticking closely to the trustees. I accept the Minister's good intentions, particularly with regard to limiting the number of trustees. I have had experience of being on a number of boards — also, I may say, not remunerated — but I have always found as chairman of a board that the fewer people you have on them, up to a certain point, the better. I have chaired a board that had about 30 members on it. It was very difficult. When you get down to ten or six you can really get some executive action going. I approve of this intention in the Bill. But I would return strongly to the fact that I believe the arguments advanced by Senator Doyle in this amendment, and the arguments I made myself on Second Stage and have continued to sustain here, are reasonable and should be considered. They must be considered at this stage. As Senator Farrell has very honestly, perhaps a little unwittingly, made clear, if this section is passed as it stands without these amendments there can be no further recourse through regulation until the Second Schedule to alter the position with regard to the age of trustees.
At the outset, it was very canny of Senator Norris to use the reference to the late President De Valera in the case that he has made. I am sure he would agree that he was an unique and a rare person and made a tremendous overall total contribution to this country. However, there are exceptions to every rule. We cannot just generalise in any one individual situation. I want to assure Senator Doyle and the House again that immediately on the passing of this Act the Trustee Savings Banks will be obliged to have a board of ten members only. They will have to make those changes immediately on the passing of the Act. There will be a reduction in the numbers of those boards from 32, 24, 19 or 15, which some of them now have. They will immediately be reduced to ten. Therefore, there will be a change and fresh thinking immediately. I appreciate the sincerity and commitment shown here by the Senators who have contributed to see if we could agree on increasing the age to 75. I think you will all agree that we are generous in having it at 70. People going on boards such as this would be doing so in their thrities, forties and fifties. When they reach the age of 70 they would, perhaps, like to take a break and relax from the pressures of deliberations in board rooms and give an opportunity to others to make their contribution. The idea that we were going to have people there for life will not now happen.
Under No. 4 of the Second Schedule, it will be possible to draw up the necessary rules to ensure that incompetent people, once it is proven that they are incompetent, could no longer be members of the board. The reduction in numbers will come into effect as soon as the section comes into force and is law. It is intended that this will be at the same time as the commencement of the rest of the Act. That should clarify the situation. I hope we will be able to agree on this section.
The Minister will be accepting my amendment?
Much as I would like to, I cannot accept the Senator's amendment.
The Minister disappoints me.
Amendment, by leave, withdrawn.
Amendments Nos. 17 and 18 not moved.
Section 17 agreed to.
SECTION 18.
Amendment No. 19 not moved.
I move amendment No. 20:
In page 15, line 26, to delete "70" and substitute "75".
Not a lot more needs to be said because, effectively, we have spoken to the substance of this amendment with the previous one. Basically, I have an amendment here to delete age 70 and substitute 75. I do not suggest that at the age of 75 anyone becomes less likely to be able to act in a competent manner as a member of the board of trustees. I put down this amendment to enable us to use it as a vehicle of discussion at this stage more than anything else. Would the Minister, for a couple of minutes, concentrate on the reason that the age of 70 has been selected as a cut-off age for membership of the board of trustees? Could the Minister indicate on what basis the age of 70 was taken? I would like 75 to be the age. Therefore, could the Minister justify the reason for not accepting my amendment? Frankly, we do not need any upper age limit at all. Competence should be the sole arbiter as to any person's ability to hold a trusteeship. Maybe there is something behind the selection of the age of 70 that I do not understand. The Minister will probably now quote precedent to me now. When it suits it is ignored such as in the case of the length of the reappointment of the trustee. The Central Bank has their equivalent being reappointment every five years. Here the Minister will probably dig up some Financial Act and say that the age is 70, that we want the Trustee Savings Banks to have a level of playing filed and, that therefore, we will kick this lot off at 70 as well, regardless. I await the Minister's response.
I have listened again with interest to what the Senator had to say. We have dealt with this matter over a wide range of amendments during the day. Modern law is such that we have to be more factual than heretofore so that there will be no ambiguity pertaining to particular matters, especially to appointments of bodies, boards, and so on. Taking into account modern thinking, and reviewing the present trustee status, membership and composition of the Trustee Savings Banks over the years, it was felt that 70 was a reasonable age at which to place a limit. We know that changes will have to take place immediately on the Act becoming law. There is a large number of people, some excellent people, on these boards. All of the trustees over the years have performed very well and have made a great contribution. are obliged, as legislators, to give an indication of our wish to the Trustee Savings Banks on the type of composition we want to see, so that we can get on the boards the best people, the people who will make the best decisions in the interests of the investors, the depositors and the borrowers. Ultimately, it will be in the best interest of the country to ensure that the best financial climate and equality of opportunity is available to all and sundry so that people can have the maximum opportunity to utilise finance in the best way possible.
The Minister says it all himself when he says the "best people" but if it is to be the best people, why has he drawn a line at 70? This means that those who are better, even though they may be over 70, have been eliminated. Accordingly, we will not have the best people. We will only have the best people under 70. It is quite possible that there will be better people over 70 years of age.
With more time on their hands.
Yes, indeed. I find it difficult to understand why the Minister has drawn a line at 70. My suspicion is that it relates to a fairly pleasant way of getting rid of some of the people off the boards. It is a polite way of shunting off whatever number they want shifted. The problems might be easier sorted out if there was an age cut-off limit. Maybe it is my way of thinking that leads me to that conclusion.
I do not accept the Minister's argument at all. If what the Minister says is logical, with respect, he could easily have accepted my amendment or, indeed, incorporated those views in the original Bill so that each trustee comes up for reappointment after five years. The Minister's defence of not accepting that was that, in any case, under the Second Schedule the rules for each trustee savings bank can be made and they can sort out their own way of getting rid of incompetent trustees. There is no need for an upper age limit whereby persons are compulsorily evicted from the boards of Trustee Savings Banks. Such people might, perhaps, be the better contributors and the more comptent trustees. We need a mechanism whereby each person's position is reviewed every five years or so. Then the less competent could be moved sideways gently. The best and the brightest of the over 70s, who have experience and time on their hands — and many have a tremendous commitment and love a voluntary involvement of this kind at that stage in their lives should not be evicted. We are talking about a voluntary involvement here, and that is worth reiterating.
If the Minister trusts the Second Schedule and the rules that will be drawn up by the Trustee Savings Banks, he should omit this section altogether and let them decide at what stage someone is incompetent. Item 2 of the Second Schedule which relates to matters to be provided for by the rules of a Trustee Savings Banks, reads: "The manner of appointment and removal of trustees of the bank". If the Minister trusts the Trustee Savings Banks to draw up their own rules and to judge the competence of their trustees — he has assured us on this in relation to his defence of the previous amendment — he should trust them to know when someone is too old to behave competently and thereby protect the best and the brightest who may be over 70 rather than force them out at 70. It is illogical, given the Minister's defence to my previous amendment — which I have just withdrawn reluctantly and under pressure I might add — to present the case he is now presenting. Let the Second Schedule and the rules of the banks decide who is competent and at what age they become incompetent. Do not tie the hands of the Trustee Savings Banks by forcing them to evict their brightest at 70 years of age.
Again, we are individualising a general situation.
I did not mention any individual.
But the Senator is talking about the best and the brightest. The evolution of man has clearly shown that we are not all at our best or brightest at 70 years of age.
Some are.
There are exceptions to every rule. If we have the best and brightest at 70 years of age, fit and committed, with a further contribution to make, now that we are changing the entire status of the Trustee Savings Banks rather than heretofore, where trustees were voluntary people, it will be possible to remunerate them. I cannot see any reason there cannot be an opportunity to appoint these over seventies, who are unique, special, particular and very bright with a further contribution to make, as advisers to these successful institutions. I do not think there is any element here of disposing or removing unfairly anybody over 70. It is a general proposal in the Bill that when people reach the age of 70 they will know the rules, regulations and the law and there will be an opportunity for them to move on. Perhaps it may help them to make an even greater contribution while they are on the board. If there is a need for these bright people to be retained or used in another way, I am sure there will always be advisory positions to which they can be appointed. That would be a matter for the board, directors or managers of the Trustee Savings Banks at any particular time.
I think the Minister is making a serious mistake.
Amendment, by leave, withdrawn.
Section 18 agreed to.
Section 19 agreed to.
SECTION 20.
Amendment No. 21 not moved.
Section 20 agreed.
SECTION 21.
My original amendment No. 22 reads:
In page 16, between lines 40 and 41, to insert the following subsection:
"(1) For the purposes of this section, ‘interest' has the same meaning as it has in section 49 of the Companies Act, 1989.".
I move my substitute amendment No. 22 on today's Order Paper:
In page 16, between lines 40 and 41, to insert the following subsection:
"(1) For the purposes of this section, ‘interest' means a pecuniary or other beneficial interest."
This is not an amendment I will be able to withdraw if the Minister is not in a position to accede to my request. It is terribly important that we have a definition of interest under section 21. We are talking about disclosure of interest by trustees of a Trustee Savings Bank. Section 21 reads:
(1) A trustee of a trustee savings bank who has—
(a) an interest in a company or concern with which the bank proposes to make or has made a contract, or
(b) an interest in a contract which the bank proposes to make or has made,
and it goes on in that way. We are talking about the disclosure of an interest. Under similar legislation — I refer the Minister to the Companies Bill — there is a similar section, directly comparable. In that section the Minister felt it essential to define "interest". In fact, I put it to the Minister that this section is inoperable without a definition of interest included.
It is a very serious section. We are talking about a person being connected to a trustee. We define what "being connected to" means, but we do not define what "interest" means in relation to disclosure of interest by trustees. I am asking the Minister to accept my amendment, or similar words; the Minister may come back at Report Stage, if he wishes. I have suggested that we could define "interest" here as a pecuniary or other beneficial interest. If the wife, son or daughter has an interest in, does that impinge on the interest of the trustee? This section is inoperable without defining interest. The Minister gave a very detailed definition of interest in the Companies Bill which was essential to make the equivalent section of that Bill operable. I await with interest the Minister's response as to why there is no definition of interest in this section of the Bill, unlike equivalent sections in other Bills.
At the outset could I say that in similar legislation, particularly the Building Societies Acts, there is no definition of interest. Here we are dealing with financial legislation similar to the building societies legislation, and we are in tandem with that legislation.
Level playing field and precedents, Minister?
Senator Doyle wants a definition of interest on the lines of the definition in the Companies Bill. I am advised that a definition is not necessary here. In the absence of such a definition the ordinary and relatively wide meaning of interest would apply. In addition, it is not appropriate, and would not be appropriate, to have a cross reference to a Bill which is currently before the Oireachtas. There is no difficulty in having a reference to Acts which have been passed by the Oireachtas, but it is not appropriate to have a cross reference to a Bill which is currently being debated, as each Bill must be taken——
All the more reason why we stay in line with the Bill that is currently before the Oireachtas.
We are talking about a different Bill — the Companies Bill. We are here talking about a financial measure designed to create a new opportunity for the Trustee Savings Banks. The legal advice available to me is that it is not necessary to have such a definition in this Bill as the wider context is much more important.
Could you put on the record of this House the normal and wide ranging understanding of our definition of the word "interest"? I do not know what it is.
I have not any documents available to me here to interpret the word "interest". It would be my opinion, reading section 21 which is very clear, that the trustees are bound to declare an interest in any company or any concern or, indeed, in any proposal in which they have a particular interest, or in any contract which the bank proposes to make or has made. If a person to whom a person who has such interest is connected, they shall disclose it to the bank. That covers the point Senator Doyle was making earlier——
It does not.
——pertaining to the situation regarding wives, sons, daughter or other connections. It is fairly clear and it will also give greater adjudication powers to the Central Bank in the consideration of the performance of any particular trustee. Once the broader definition of interest is there, the Central Bank will have much broader opportunities to adjudicate in any particular situation pertaining to non-disclosure by a trustee of their interest in a particular situation or in a connection with any contract or company with which the bank proposes to do business or, indeed, has done business.
I put it to the Minister that this section is inoperable without a definition of interest, as the section is concerned with disclosure of interest. We all have a vague view as to what interest may or may not be but without a clear definition included in this section, as we feel is necessary to include in the Companies Bill which is presently going through the Oireachtas as the Minister pointed out, we are presenting to the legal people a field day. Dare anyone challenge — you or I, if we happen to be trustees of a board — that we did not disclose our interest? How much of an arm's length would an interest in a certain business relate to a trustee savings bank? If your wife had a major interest, or even a minor shareholding, in a company that wanted to borrow — now we are giving corporate powers to the Trustee Savings Banks — from a trustee savings bank, is that an interest if you are a trustee? You are not responsible for your wife.
We should define here what interest means and how close it is connected. If your son or daughter worked for a company that is looking for a loan of money from a trustee savings bank, you are not responsible for them once they reach the age majority. Is that an interest in terms of your trusteeship? Is your daughter-in-law, one step further out, who may be managing a little company that is looking for a loan — as they will be able to in the future from a trustee savings bank — too far out? Is that not an interest when it is the daughter-in-law? Where does interest begin or end? It is a minefield. The legal people will have a field day. We are really giving them a licence to go to town on this. I suggest that without a definition it will be virtually impossible to challenge whether or not a trustee has disclosed his interest. I would ask the Minister to please reconsider this matter and to accept my amendment which is only trying to achieve what the legislation is trying to achieve. We must have a proper system for the declaration of interest and without a definition of that interest we are going nowhere.
We have to be clear about the position pertaining to one's interest or one's personal connection. One's wife, daughter-in-law or son-in-law does not necessarily have to be involved in a company for one to have a connection with that company. One can be involved with people on boards, corporate bodies or organisations or can be personally friendly with people who may be applicants for financial accommodation from the Trustee Savings Banks. Does that mean that a person because of his friendship with somebody has an interest? I do not think it does.
I should hope not.
As far as I am concerned an interest is where trustees would create an environment whereby they or perhaps their families would benefit financially without the knowledge of the other trustees and would be able to generate an opportunity for personal gain or create a climate which may be positively in favour of a particular individual or company above and beyond the normal opportunity available to the ordinary citizen who may apply for the same financial accommodation. The fact that we are inserting this measure in this section allows a broader context to be taken into account. It gives flexibility to the Central Bank to be able to make a broader adjudication. At the end of the day it serves the Trustee Savings Banks and, ultimately, the individual depositor and indeed the individual lender in a better manner.
Dare I suggest that there is sloppy drafting in this section? We define a connected person here and we define a connected person in the Companies Bill. We define interest in the Companies Bill but we do not define interest in the equivalent section here. This is sloppy drafting. The Minister is being disingenuous again and I cannot accept the point he is trying to make. Effectively, he said he agrees with my amendment where there is a pecuniary or a financial interest. If he agrees with it, he should please accept it and we will have no problems with this section.
I can agree with it in the overall context without being absolutely specific and enshrining it in the law. The Senator's point is well made, but I think we must allow flexibility to the Central Bank so that they can adjudicate on the motives and the performance of a person, on whether that person, being a trustee, used his own situation on a board to have a decision made in favour of a company or an individual which normally may not have been made. We must allow that flexibility to the supervisory body to decide whether or not the trustee acted improperly in any particular instance. If we narrow it down we take away the flexibility and the adjudication rights that the Central Bank, as the broad supervisory authority over all financial matters in the State, needs to have.
Mr. Doyle
We are giving the legal profession a licence to have a field day.
An Leas-Chathaoirleach
Is the amendment withdrawn?
No.
An Leas-Cathaoirleach
I am putting the Question: "That the amendment be made."
Vótáil.
The question is: "That the amendment be made." On that question a division has been challenged. Will those Senators calling for a division please rise?
Five or more Senators stood.
The division will proceed.
The Committee divided: Tá, 6; Níl, 19.
Tá
- Doyle, Avril.
- McMahon, Larry.
- Manning, Maurice.
- Naughten, Liam.
- Norris, David.
- Ross, Shane P.N.
Níl
- Bennett, Olga.
- Bohan, Eddie.
- Byrne, Hugh.
- Cassidy, Donie.
- Dardis, John.
- Fallon, Sean.
- Farrell, Willie.
- Finneran, Michael.
- Fitzgerald, Tom.
- Honan, Tras.
- Hussey, Thomas.
- Kiely, Rory.
- Lanigan, Michael.
- Mooney, Paschal.
- Mullooly, Brian.
- O'Brien, Francis.
- Ó Cuív, Éamon.
- Ryan, Eoin David.
- Wright, G.V.
Tellers: Tá, Senators McMahon and Manning, Níl, Senators Farrell and Hussey.
Question declared lost.
Section 21 agreed to.
SECTION 22.
Amendments Nos. 23 and 24 not moved.
Section 22 agreed to.
SECTION 23.
Amendments Nos. 25 and 26 not moved.
Question proposed: "That section 23 stand part of the Bill."
I would like to get an explanation as to why we are again stepping out of line in the treatment of Trustee Savings Banks under section 23 relative to the Central Bank Act or the Building Societies Act. The Minister quoted precedent and the need to keep in line and keep a level playing field with the other financial institutions. Yet in section 23 (6) we are prohibiting Trustee Savings Banks from purchasing, leasing, selling or exchanging buildings or other land or erecting buildings or incurring expenditure of a capital nature on the doing of work to buildings or other land of the bank without the consent of the Central Bank.
We are talking about a period of rationalisation for our financial institutions in the years ahead. Some years ago up to four banks and other similar institutions had a branch each in some towns but these have been rationalised down to one or two branches in most areas. The banks were not prohibited from disposing or otherwise of their surplus buildings and other capital requirements so why are we placing restrictions on the Trustee Savings Banks from disposing of any property they may not need with a view to future rationalisation? It is possible that the two remaining trustee savings banks will amalgamate. They had negotiations some years ago——
They possibly will.
I accept that fully so why are we placing restrictions on them? I accept that the Minister does not intend to prohibit but he is placing restrictions on their ability to freely deal or dispose of property surplus to their requirements. There may be a good reason for this but it is important to point out that we are not placing those restrictions on other financial institutions. Therefore, we are not talking about a level playing field, a precedent or anything else. What is the rationale behind this? It seems to be totally illogical.
I should like to point out that we are not placing restrictions on the Trustee Savings Banks. We are incorporating into the new Bill a provision that is contained in the old legislation. Subsection (6) states that the trustees of a Trustee Savings Bank shall not buy, lease, sell property and so on or engage in capital works such as building new offices or extending offices without the consent of the Central Bank. In the case of any property purchase or leasing from the trustees of a Trustee Savings Bank the Central Bank approval of that transaction may be taken as given. The amendment proposes that the authority of the Minister for Finance should be required for property purchase and leasing by the Trustee Savings Banks. That would be totally inappropriate. This is part of the day to day activities of the Trustee Savings Banks. The approval of the Central Bank will be required and the Minister should not be involved in what is essentially a supervisory function.
The Minister stated on several occasions that we are repealing the old legislation governing the Trustee Savings Banks. It is right that we should do so because it is very old but I wonder why he has chosen to incorporate this section directly from the old legislation. I fail to understand the reason for it. Subsection (6), together with similar provisions in the Building Societies Act, 1989, has been specifically included in the Bill to ensure consistency in the detailed provisions of banking laws as they will apply to all financial institutions.
I am not clear as to why this section which places restrictions on the purchase or sale of buildings and other expenditure of a capital nature relating to the buildings will apply only to the Trustee Savings Banks. It is illogical; it is irrational given that we are trying to establish a level playing field and fair competition between all the financial institutions. It does not make any sense with amalgamation and rationalisation in the offing. Trustee Savings Banks will not be able to sell a sub-branch without a big scene with the Central Bank. Other financial institutions do not have that restriction and I wonder why the Minister is imposing it on the Trustee Savings Banks.
The position in regard to Trustee Savings Banks is different in that we are talking about a unique structure. The Trustee Savings Banks were set up in a different way to the other banks. At present the Minister for Finance has supervisory power and is the controlling authority pertaining to leasing, selling, managing or changing property. We are transferring that responsibility to the Central Bank. The reason is that the scope of the Trustee Savings Banks is being changed. Obviously, if we are to change their ratio of lending rights, if we are to give them different opportunities, and if we are creating a new environment for them we must take into account their reserves, the role they should play. The responsibility which lay with the Minister for Finance is being transferred to the Central Bank.
I do not visualise any difficulties arising because the Central Bank must take cognisance of the financial environment in which the Trustee Savings Banks operate. We must take into consideration the competition they have with other banks. The Central Bank cannot make decisions that would put the depositors of the Trustee Savings Banks at a disadvantage or put any impediment in the way of the commercial opportunities available to the Trustee Savings Banks. I do not see any difficulty with this transfer of functions which were the responsibility of the Minister for Finance to the Central Bank. That is being done in the best interests of depositors and in the interest of proper financial management vis-à-vis the unique position of the Trustee Savings Banks.
We now have semi-State financial institutions without any restrictions and they enjoy a special position in terms of protecting the taxpayers' money and investments. Those bodies do not have the restriction of having to obtain the permission of the Central Bank. Banks now use agents for sub-offices rather than erecting new buildings. I have no doubt that this provision will prove to be unnecessary. In fact, it contradicts what the Minister has been saying about the need for consistency and a level playing pitch.
I should like to support Senator Doyle. Will the Minister say in what circumstances he envisages the Central Bank invoking the powers they will have under this section? Will the Minister give the House an example of how this will operate? Is he in a position to say when they will have to make use of this provision?
The Senator has put a hypothetical question to me.
That is what the section is there for.
We do not envisage any difficulty in regard to this section which refers specifically to Trustee Savings Banks. Senator Doyle referred to the position in the semi-State sector — I am sure she was referring to the ICC and others — but I should like to tell here that they must have consultations before they can take certain decisions. If in a lending ratio liberation which the Central Bank would approve for the Trustee Savings Banks, the Trustee Savings Banks decided to acquire property or to go into a certain line of activity then the Central Bank would invoke the section. The Central Bank may decide that that activity was not the role of the Trustee Savings Banks. The Minister for Finance has a supervisory and consultative role to play. We are seeking to transfer those powers to the Central Bank, the national supervisory and financial authority over all financial institutions. I presume the section will ensure that if the board of a bank take a decision to acquire a certain block of property or a company the Central Bank may invoke the section if they are not satisfied with the reasons given.
The building societies are not restricted in this way.
I should like to make a personal observation. If we are giving the Central Bank a supervisory role in regard to the Trustee Savings Banks what they will be doing will be part and parcel of their work. I do not see how there will be any difficulty about this. Section 23 states that the trustees of a Trustee Savings Bank shall not purchase, lease, sell or exchange buildings or other land or erect buildings or incur other expenditure of a capital nature on the doing of work to buildings or other land of the bank without the consent of the Central Bank. I am certain that the Central Bank will be reasonable in their approach to this. I am sure they will see such moves as normal transactions of a Trustee Savings Bank.
Why are building societies not similarly required to get permission from the Central Bank? This is illogical.
Will the Minister say why the Trustee Savings Banks have been singled out for this treatment? It is an enormous restriction — I was not aware of it before now — on the ability of Trustee Savings Banks to operate. It will mean and enormous reduction in their competitiveness against the other banks. This is a major issue. We are talking about their rights over property of any type. We are talking about their right not only to buy or sell property but to lease or to do anything with property. I cannot understand why property has been singled out as a restriction for the Trustee Savings Banks. This means that they are not competing at all in one of the major markets, in one of the major financial instruments if you like, open to the banks. I cannot understand why the Trustee Savings Banks have been singled out specifically. Perhaps the Minister of State can tell me if there is a parallel restriction on any other institution.
In reply to Senators Ross and Doyle, let me repeat what I have said already earlier today. The Trustee Savings Banks are a unique structure set up under specific legislation and have clear guidelines. It is proposed in subsection (6)——
So are the building societies.
——to transfer supervisory control from the Minister for Finance to the Central Bank. As my colleague, Sentor Fallon, has pointed out, we do not visualise any difficulties for the Central Bank in interpreting this. The Central Bank directors and management are familiar with the financial environment in which we operate. I appreciate what Senator Ross says about the property market and the opportunities that lie therein and that it would be unfair to put a restriction on the Trustee Savings Banks. What we are saying is that we do not visualise restrictions but, due to the uniqueness and status of the Trustee Savings Banks, we believe we should transfer the controlling authority from the Minister for Finance to the Central Bank and that what is contained in the old Act should be carried over into this Bill. The building societies find themselves in a different position in that they are owned by the shareholders and are managed on their behalf. In most cases apart, from their national headquarters and the branches in the bigger provincial centres, they operate on an agency basis. They have a different status to that to the Trustee Savings Banks. They are unique. Senator Ross spoke about the restrictiveness of this provision, but the whole thrust of this Bill is to remove that restrictiveness, to open up opportunities and to provide increased options for the Trustee Savings Banks.
It is not the level playing field we are trying to achieve. It runs contrary to that.
It is a level playing field.
It is not.
It is from a different point of view.
An Leas-Cathaoirleach
The Minister of State to continue without interruption.
It is in that, if a positive proposal is made which the Central Bank are satisfied with which is positive and secure, there will be no difficulty. Surely, the Central Bank, as the common supervisory authority for financial institutions, cannot make a decision in one case which would discriminate against another institution.
It can.
It may, but that is a matter of opinion. I do not think that the Central Bank operates in that kind of environment or makes that type of negative decision. It must take an overall view in the best interests of the nation and the financial markets. It cannot operate in isolation and say "We are going to support this and stop that there". It could not operate on that basis. It would not be fair to do so. I am confident that the Central Bank would not do so.
The Minister of State has said that the building societies are owned by the shareholders and that the Trustee Savings Banks are owned by the trustees. The more I think about it the more I feel that the Minister of State for some reason does not trust the trustees. Perhaps there is something wrong with the Trustee Savings Banks at the moment and the Government have no confidence in them——
That is very unfair.
That may be. I am only saying that the implication is that the trustees cannot be trusted.
That is the Senator's interpretation.
If they could be trusted they would be left, as the owners, with this very large responsibility. For some reason instead of it being transferred from the Minister to the trustees, which to my mind would be the logical thing to do in a Bill of this sort, it is being transferred to another State run, State organised and State directed body. In fact, this is reducing the independence of the Trustee Savings Banks to a degree where it would be totally wrong to say that they are competing in any equal form with other banks. The question I would like to ask is: why did the Minister of State not leave it with the trustees. Why did he not just say that the trustees can do what they like in regard to property, that they are people in whom the Government have confidence? To me this implies a lack of confidence that he has to give that responsibility to the Central Bank. Can the Minister of State tell me if he has that sort of confidence in the trustees?
If Senator Ross takes time to read the report of the debate in the Dáil on this Bill——
I have done so.
I am very pleased to hear that. I am sure if he had listened to some of the contributions already made on this Bill today he will know that we have the utmost confidence in the trustees and indeed in the management of the Trustee Savings Banks. The Minister for Finance confirmed this in 1984. There is no doubt about this. We still have that confidence in them. This is not restrictive and does not show any lack of confidence on the part of the Government or the Central Bank in the trustees or in the decisions they have made. The property is only invested in the trustees and will remain so. This is carried over from the existing law, but it has been broadened to include block consents to be granted by the Central Bank on a very liberal basis.
Why do we need it at all? Has it just been, if I may use the word without any wrong connotation, plagiarised from the old Trustee Savings Bank legislation and lifted in here without sufficient thought? We will give the Minister of State the benefit of the doubt. Perhaps the implications of including this section were not as obvious as they must be now. Would the Minister of State agree to withdraw this subsection from the Bill?
I support the Deputy's request. The Minister of State in his reply seemed to be anticipating the decisions of the Central Bank. If I understand his reply correctly he is saying that the law has been interpreted in a very liberal fashion and that therefore it will continue to be interpreted in a liberal fashion. Nothing could be further from the truth. I can envisage the trustees and the Central Bank coming into conflict over a decision of this sort. In that event the Central Bank would of course make the decision. That is a situation I would like to avoid. The Minister of State could easily avoid it by leaving the Central Bank our of this but it seems that he is justifying the inclusion of this section by saying there is no need to worry because the Central Bank would make the right decision. That is bad law as for as I am concerned.
Again, I cannot understand why the Senators are persisting with this amendment. As of now, until this Bill is passed, the onus is on the Minister for Finance in matters such as this, if they intend to sell a branch in Cork, Athlone or Longford——
There is no level playing field.
They have to go to the Minister for Finance to obtain permission to sell. One of the major objectives of the Bill is to switch the supervisory power to the Central Bank. We are being consistent. We are saying that, because the Central Bank would have the supervisory power, the Trustee Savings Banks would have to ask the Central Bank for permission to sell a branch in Athlone, Galway or wherever. This is not an issue which should be persisted with.
It is a major issue and a source of major concern to the Trustee Savings Banks. Once this Bill has been passed they will become uncompetitive, relative to other financial institutions.
An Leas-Chathaoirleach
The Minister of State to reply without interruption.
Let me clarify this matter. It is now ten years since a decision was taken to bring forward new Trustee Savings Banks legislation. Therefore, the genesis of this Bill goes back over a good few years. No effort was made to rush in or carry over any section from the old Bill into this Bill. Great care was taken and the best legal advice was obtained to ensure that we brought forward before this House the best legislation possible. What we are talking about here is a transfer of functions from the Minister for Finance to the Central Bank. We do not visualise any difficulties with this. It is important we do so and our advice is that it should be done. I put it before the House and I ask the House to accept the section.
The terms of this section are very broad with regard to any type of capital expenditure, presumably meaning that if the trustees want to spend £1,000 on capital expenditure — and there would be many circumstances in which that would be possible — they would have to go to the Central Bank for that. If the trustees want to spend £500 they will have to go to the Central Bank for permission. If they want to spend £10, and there are capital expenditures of £10, will they have to go to the Central Bank for permission.
Yes, they will according to this Bill.
This is absurd.
If they want to put a nail in the wall they will have to have permission from the Central Bank.
Will the Minister not consider at least putting in a lower limit on this by saying £50,000 to £100,000 or a limit which he feels is reasonable? This seems to embrace every item of capital expenditure on a building.
It does.
I do not know exactly what that embraces but it embraces an enormous number of things. If they put in a new window is that capital expenditure?
Yes.
If they call a glazier is that capital expenditure? Will the Central Bank have to direct the trustees not to quantify that as capital expenditure?
It will be under "miscellaneous" or something.
We are going from the sublime to the ridiculous at this stage. We are talking about financial institutions, about banking, about transferring powers from the Minister for Finance to the Central Bank. If we are talking about property matters, we are not talking about property in modern property terms if we are talking of expenditure of £10 or £100.
It refers to the doing of work to buildings.
That is a management function. Surely the discretion is with the management as to how they improve their buildings, present their property, and promote their companies. We have had no difficulty up to this with the Minister or the Department of Finance as the supervisors of the Trustee Savings Banks in the progress——
They were probably breaking the law all along.
——that the Trustee Savings Banks have made over the past ten or 12 years despite the restrictive environment in which they operated. We are now liberalising the whole operation for them and this is a transfer of functions. There will be block consent from the Central Bank and we do not visualise any difficulty or unfair restrictions being imposed on them.
Will the Minister tell me what is meant by the doing of work to buildings and where the lower limit on that comes?
Will the Senator quote the section?
It is subsection (6), page 19, line 20.
Subsection (6) covers the entire property portfolio pertaining to Trustee Savings Banks. It states clearly:
The trustees of a Trustee Savings Bank shall not purchase, lease, sell or exchange buildings or other land or erect buildings or incur other expenditure of a capital nature on the doing of work to buildings or other land of the bank without the consent of the Central Bank.
This may be general or limited to a particular transaction. It can be a general consent or a limited consent. It is something which has worked well over the years. It is something that we recommend should be done again. It is something that has been legally clarified as being necessary. I regret if I cannot convince the Senators of the necessity for this but I am satisfied that the operation of this provision will impose no restrictions on the Trustee Savings Banks.
I am satisfied that the Minister is genuine in his belief but I would like to know when permission will have to be sought. It says that permission will have to be sought in every case of capital expenditure on the doing of work to buildings. It is not even a matter of them doing it and then seeing if it is all right afterwards. In every single case where they are incurring capital expenditure on the doing of work to buildings, they have to get permission. It may not have worked like this in practice before but that does not justify us passing badly worded, badly drafted legislation. The Central Bank can, whenever the Trustee Savings Banks want to incur minor capital expenditure, require them to get permission. I am talking about small amounts of money, about buying desks, about painting walls and so on. The Trustee Savings Banks cannot do those things without permission.
Will the Minister explain what is capital expenditure here and then we might get to the bottom of this because otherwise we are talking about minor amounts of money. Capital expenditure is not necessarily something which is very high. We could be talking about tiny items of expenditure and they will have to seek the permission of the Central Bank.
The Senator is missing the point. The purpose of the Bill is to ensure that competitiveness and opportunity prevails across the board for the Trustee Savings Banks. Theoretically this section includes everything but it will be operated in a broad way, with block consent which will not inhibit the competitiveness of the Trustee Savings Banks. Senator Ross is talking about the technical management of a particular situation at any given time as if to say that if a bank needed a new window they would have to request the permission of the Central Bank for it. We are not talking about a situation like that but about block proposals from the Trustee Savings Banks going to the Central Bank.
It does not say that in the section.
When responding to subsection (6), I clearly stated that it covered block consent.
That is not what it says in the Bill, with respect.
Maybe not, but I am here to give the interpretation of the Bill. I hope I have clarified the thing. We have more than teased this out. We have reached the limits of elasticity as far as I am concerned and I put it before the House as being necessary, as being recommended and as being legally advised in the best interests of the Trustee Savings Banks and the people of the country.
An Leas-Chathaoirleach
Is section 23 agreed?
No.
Perhaps the Minister could solve this problem by telling us exactly what expenditure of a capital nature on the doing of work to buildings, means. Does it include minor items of expenditure or is the Minister saying that it is only a policy decision about large matters? That is not what it says in the Bill but that is what it appears to me the Minister is saying and that is in direct contradiction to the section as the Minister will know if he looks at it carefully. We are not here to allow sloppy legislation through because it is unlikely that something will happen. I can envisage a situation where the Central Bank interfere on the tiniest items of expenditure because the Trustee Savings Banks did not ask for permission. As far as I am concerned the Central Bank has every right to do that under this Bill.
It is ridiculous that sloppily drafted legislation should be allowed through. If the Minister could tell us what expenditure of a capital nature on the doing of work to buildings means specifically, maybe we will get through this. Otherwise, it means any sort of spending at all and we could have a chaotic situation in the future. The Minister knows as well as I, that this Bill has taken ten years to draft and it will be 25 years before it is amended again. We should not allow this legislation to go through for posterity nor allow the Central Bank and the Trustee Savings Banks to come into conflict on minor items of expenditure, which is what this is allowing. Perhaps the Minister could tell me what this phrase means.
The Central Bank and the Trustee Savings Banks will have no difficulty, as far as I am concerned in incorporating what has prevailed successfully and for so long between the Minister for Finance and the Department of Finance. Clear guidelines can be agreed vis-à-vis expenditure, nominal expenditure, minor expenditure. Where the Central Bank require the Trustee Savings Banks to put forward proposals pertaining to larger capital expenditure there should be no difficulty. There would be no hope for this country financially if we had to operate in an environment where permission had to be sought from the Central Bank for every single penny expended by an institution.
Exactly.
There would be no hope whatever. There is no point in suggesting that is the case. It has not been the case, it will not be the case and the guidelines will be agreed on a block, consensus basis between the Trustee Savings Banks and the Central Bank in the best interests of everybody.
I know there is some pressure to continue but I beg the House's indulgence. I think the Minister bases his justification for this section on hopes that clear guidelines can be agreed. I base my objection to it on the fact that this leaves us where there may be serious conflict, and serious conflict on very minor matters. It is not good enough for a Minister to come forward and say, this will be allright because we are dealing with sensible people who have a liberal policy. We are not here to legislate for sensible people who have liberal policies; we are here to legislate for stupid people who have stupid policies because that is what we must prevent. The Minister is legislating for the most optimistic possible scenario. We should be legislating for the worst possible scenario and taking precautions against that. We are allowing through here very sloppy legislation which could give rise to conflict which, with minor amendment or the co-operation of the Minister, could be solved this evening.
The case for taking out or amending this section is great and surely self evident to everybody in this House, and I must say I find the Minister's reply totally unconvincing. I am a little tired of putting forward amendments in this House at this time of year or towards the summer recess when, whatever case is made for them, whatever the Minister's or the Government's belief, there is no question of them being accepted because the Minister is not going to let the Bill go back to the Dáil. It is just not good enough that because the Dáil wants to adjourn this week and the Minister does not want to take the Bill back to the Dáil, we should allow this to go through.
I agree.
I suggest to the Minister that he reconsider this and have the political courage to go back to his Senior Minister and say, "We have made a mistake in this section, I am going to accept an amendment to it and I am sorry about it, it may delay the timetable but we will delay our political timetable for the sake of getting some good legislation through". The Minister might consider this or I will have to consider putting an amendment down on Report Stage.
I have give my views. I am not at all happy with this section. I concur with what Senator Ross says. I think the section is totally unnecessary even if we are not going to get a definition of work of a capital nature to buildings. Obviously the Minister is not going to give that to us.
This subsection is totally unnecessary because it leaves the Trustee Savings Banks uncompetitive relative to the other financial institutions in property dealing, disposing of unnecessary assets etc. It is unnecessary without our ever getting down to defining what it means. I ask the Minister to consider coming back to us on Report Stage, having left his mind open here this evening to withdrawing section 23 (6). The section is irrelevant and unnecessary and it fouls the level playing field we talk so much about in relation to this legislation.
I want to go back on this section. Senator Ross and Senator Doyle are making a mountain out of a molehill. The Trustee Savings Banks since they were formed have made steady progress. They have built new offices and new banks. They have not been hindered with their work by the Department of Finance. The Minister on Second Stage told us of further expansions. Are the Central Bank going to say to them, "Sorry, you cannot build your little bank in Longford" or Galway or wherever?
Selling it would be more likely the issue.
Senators who say they do not know what expenditure of a capital nature means are trying to fool us. Somebody asked if it meant we would have to go to the Central Bank for expenditure involved in putting a nail in the wall. This is total nonsense. Expenditure of a capital nature means what it says, something worthwhile, such as if you are going to build a large extension or another branch. That is what it has meant to the Department of Finance in the past. If we want to exagerrate a very minor issue we are being unfair. This section will present no problem for the Trustee Savings Banks.
Why are the building societies so restricted then? Why is this not in the Central Bank Act?
I am glad Senator Fallon raised this point because I was not going to let it go anyway. The Minister has given us no definition of expenditure of a capital nature. I ask him again to give it to us and solve the problem. I tell Senator Fallon I have seen knives, forks, spoons, mats and such minor things in accounts year after year classified as items of capital expenditure, and they are things that cost less than £5. For 20 years I have seen this sort of thing. They are caught by the Bill by any normal, respectable accountancy standards. The Minister has a duty to tell us what expenditure of a capital nature means and whether there is any minimum limit on it. Perhaps he will tell us what the minimum limit is.
I have given long and deliberate consideration to this and I have nothing further to add, but I will take into account Senator Doyle's request to reconsider the matter on Report Stage.
Question put and declared carried.
Sections 24 to 26, inclusive, agreed to.
SECTION 27.
I move amendment No. 27:
In page 24, subsection (2), between lines 32 and 33, to insert the following:
"(c) from publishing or continuing to publish an advertisement or from issuing circulars inviting the public to take out loans.".
This amendment seeks, in the event of Trustee Savings Banks being prevented from seeking deposits, to prevent them issuing loans. It is an attempt to make the provisions more comprehensive. If a bank are not suitable for taking deposits then I think there is little purpose in their giving out loans.
Let me ask the Minister before he replies why this section is not consistent with section 39 of the Central Bank Act, given this level playing field, precedent and consistency we are purporting to look for.
Section 27 empowers the Central Bank to give directions to a Trustee Savings Bank regarding the content of their advertisements and whether they may advertise for deposits. Senator Upton and colleagues propose an amendment to extend these powers to loans as well as deposits. The existing provision is based on section 39 of the Central Bank Act, 1989. Deposits are singled out because the immediate concern in any case of difficulty would be to limit the Trustee Savings Banks from taking in further deposits. This would in turn limit their ability to make further loans. Section 27 (1) allows the Central Bank to control the content of advertisements and any event, should the situation require it, section 26 allows the Central Bank to direct a Trustee Savings Bank to suspend all or part of its business. The addition of a specific provision on advertising for loans is not therefore required.
I am trying to digest the mouthful the Minister has just spat. The term "advertisement" contained in this section is not defined in a manner consistent with section 39 of the Central Bank Act. Why is this so? Is there a reason for departing yet again from the level playing field? Sometimes I will count the number of departures we have had and wonder why we ever began using that expression.
The existing provision is based on section 39 of the 1989 Central Bank Act and we are advised that it is not necessary to have a further definition of it. It is consistent.
Amendment, by leave, withdrawn.
Section 27 agreed to.
Sections 28 to 31, inclusive, agreed to.
SECTION 32.
I move amendment No. 28:
In page 26, subsection (2), line 26, after "aforesaid" to insert "The designated proportion shall not exceed 70 per cent of the monies deposited with the bank.".
I wanted to move a little more slowly through the various sections and to speak on section 31. It appears there has been a discriminatory approach ——
An Leas-Chathaoirleach
Section 31 has already been agreed.
I did ask if we could take things more slowly so that we would have the opportunity to contribute. I did specifically say that. I would like to put on the record that there has been a discriminatory approach in the treatment of Trustee Savings Banks in section 29, 30 and 31. It is another example of not having a level playing field. I will leave it at that. The section has been passed, but I want to put it on record that there has been a discriminatory approach in relation to the treatment of Trustee Savings Banks relative to the other financial institutions.
Section 32 deals with the investment of funds of Trustee Savings Banks. In regard to my amendment, I should like some indication from the Minister as to what proportion is envisaged. The section refers to the designated proportion "as may be determined by the Central Bank after consultation with the Minister". Could the Minister indicate what he has in mind and what type of proportion we are likely to be referring to?
Section 32 deals with the investment of Trustee Savings Banks' funds, the Minister's special account in the Post Office Savings Bank and the payment of interest thereon. This section provides for the continuing investment of funds in the Exchequer by the Trustee Savings Banks. The Central Bank, after consulting the Minister for Finance, will determine the proportion of total funds to be so invested at any time. Senator Doyle proposes that there be a ceiling of 70 per cent of total deposits in this proportion. The present amount lodged to the Exchequer is 80 per cent and the intention is to reduce this progressively over time. The combined primary and secondary liquidity ratios of the Associated Banks at present amount to 35 per cent of their relevant resources. The rate at which the present 80 per cent would be reduced would depend among other things on the opportunities which would become available for prudent expansion of Trustee Savings Banks' business. The imposition of a ceiling of 70 per cent would impose a requirement to reduce from 80 per cent to 70 per cent immediately, regardless of the opportunities available for the prudent expansion of Trustee Savings Banks' business.
Amendment, by leave, withdrawn.
Section 32 agreed to.
Sections 33 to 35, inclusive, agreed to.
SECTION 36.
An Leas-Chathaoirleach
Amendments Nos. 29, 30 and 31 are related and may be discussed together.
I move amendment No. 29:
In page 28, line 15, after "remove" to insert "subject to the provisions of subsection (3) to (5)".
This section deals with the appointment, qualification and removal of an auditor of a Trustee Savings Bank. I am directing my amendments to the removal procedure in respect of an auditor. There is a glaring omission and a lack of equality in that there is no appeal procedure. If an auditor is removed from office for any reason he is not entitled to appeal. Any professional person who is removed from office faces a very uncertain future. The very least he or she should be afforded is an appeal in relation to the issue before them. I hope my amendments are self-explanatory. Amendment No. 30 purports to include new subsections, one of which states that the trustee shall give 21 days notice to an auditor of their intention to remove him from office and shall also serve notice of their intention to the Central Bank and during this period the auditor may appeal in writing to the Central Bank against the proposed decision of the trustees to remove him. This is a basic right of anybody put in the position of being removed from a professional post.
My amendment goes on to state that the Central Bank should be able to decide an appeal under this section, subject to the consent of the Minister. The reference to the Minister is not, perhaps, ideal but it is the best available, given the structures within which we are talking. Before deciding thereon the Central Bank shall consider any representations duly made either orally or in writing on behalf of the auditor or trustees. That is self-explanatory and would be a minimum requirement in removing anybody from such office.
My amendment continues that, for the purposes of this section, a notice of intention to remove an auditor shall include all notices, documentation and other communications relating to the meeting of the trustees at which it was decided to remove the auditor. Here we are dealing with rights of freedom of information. If I were being removed from office, the decision having been determined at the meeting of the trustees in this case, I should like access to the documents, minutes and all other relevant literature or information presented at the meeting.
I await the Minister's response. The Building Societies Act contains an elaborate appeals procedure. When it suits us we refer to the level playing field and consistency; if not, it is ignored, as in this Bill. I know the type of procedure provided for there is not directly applicable here, but the principle of an appeal has been conceded and we must at the minimum include the principle of an appeals procedure for anyone removed from office in this Bill. I am not saying that the parliamentary language I have used in my amendments is the only or even the best way of conceding the principle of an appeal for such an auditor. I will be advised by the Minister if he feels there is a better way of expressing it or a better system of including the principle of an appeal for such an auditor, but if the Minister feels there is a better way of expressing the content of my amendment or a better system of including an appeal system for such an auditor, I will be guided by him.
Section 36 covers the appointment and removal of an auditor, circumstances under which an auditor may be disqualified from the position and the type of people who will be ineligible for appointment as auditor. Senator Doyle wants notice to be given to and provision for appeal by an auditor whom it is proposed to remove from office before his term of office expires. The appeal would be to both the Minister and the Central Bank. This is not really necessary as the matter is unlikely to arise as a practical problem.
A trustee savings bank would only remove an auditor from office before his term expired in the most serious circumstances as the auditor would have recourse to the courts if he felt the trustee savings bank acted without due cause. The procedures laid down in the building societies legislation are to ensure that the auditor can make the members of the society aware of what is going on. That is not relevant in the case of a trustee savings bank, which does not have members like a building society or shareholders like a company. It is the trustees who will take the decision. In the building societies or Central Bank legislation there is no provision for any appeal to any quarter outside of the immediate body concerned in the case of the removal of an auditor from office.
There is an appeal code.
There is a right of appeal to the body concerned. Senator Doyle also wants an appeal from the Central Bank's direction to the Trustee Savings Banks not to appoint or reappoint a named person as auditor. This is not appropriate and no such appeal is envisaged in the building society or Central Bank Acts. Senator Doyle also wants to delete the qualification "other than an auditor" in section 36 (10) (a) in describing persons disqualified from being auditors of the Trustee Savings Banks. I take it that her concern here is that it implies that an auditor could be an officer of the bank rather than an independent third party, whose relationship with the bank consists of providing a professional service. The qualification set out in the Bill do not make the auditor an officer of the bank or change his status. It is simply a precaution in case an auditor might need to be regarded as an officer of the bank for a specific purpose. When auditors are carrying out functions for normal corporate bodies or companies, they can be removed at any time by a vote at an annual general meeting and they have no recourse to appeal. They are employed on the basis of their performance and their professionalism.
They are entitled to attend the annual general meeting and question what went on——
An Leas-Chathaoirleach
The Minister to continue without interruption, please.
——but not under this Bill.
They are entitled to be present at the annual general meeting to explain the figures contained in the accounts and the reports which they present, but once the point comes where an auditor is to be appointed, as far as I am aware they must leave the meeting.
I would like to comment on the appointment of the auditor. In the course of the insurance Bill, we discussed at some length the role of the auditor. At that time the Minister introduced a fairly substantial amendment to give the auditor direct access to the Minister in cases where he found something amiss, or if he felt the company was trading in such a way that it might not be in a position to meet its liabilities, there was a requirement on the auditor to make that fact known to the Minister responsible.
Under the provisions of this Bill, I find it quite extraordinary that an auditor can be dismissed without reference to a broader body. The Central Bank is informed, but perhaps the Minister will take us through the process? Let us take an example where a duly appointed auditor is going through the books, and finds something amiss and gives some indication of that fact to the trustees, and at that point is dismissed,
Exactly.
——or removed from office, if that is the appropriate phrase. At that point, what is the auditor's duty?
To whom does he give the information? It seems there is no place they can bring this information. I understand that under company legislation — I stand to be corrected and the Minister will very quickly do so — an auditor can only be dismissed at an annual general meeting. The Minister is quite right when he says the auditor can address the meeting, but I find it unusual that the trustees board could dismiss an auditor without reference to a wider body.
I would like the Minister to clarify how the auditor is required to conduct himself, what he is supposed to do with information he has gathered during the audit which has never been published because he was dismissed and removed from office before the audit was completed.
I am very glad Senator Doyle put down these amendments because had she not done so, I would have tabled something very similar. I would have done so because I was extensively briefed by the Consultative Council of Accounting Bodies in Ireland. They specifically drew my attention, and possible also Senator Doyle's, to their concerns in this matter. It would not be taken that it is just a set of partially informed, well meaning Senators who have concerns in this matter. It is the principal professional body representing the accountancy profession in this country, and I do not think it is possible to dismiss these problems quite so airily as the Minister and his advisers wish to do at this advanced hour. They are very important amendments, and they have not been fully answered.
I have some small acquaintance with this, as I am managing director of one company at least and a director of several others. I think the Minister may have confused the situation in which a board declines to reappoint an auditor at a general meeting, at which meeting the auditor may be present and may answer questions from shareholders or interested parties. Indeed, some may be primed to bring out certain things so that he may have the opportunity to explain himself and thereby plead his case. There is a difference between that and a decision taken in between general meetings and not at an annual general meeting to summarily dismiss a professional. I made this point at some length during second Stage and I hoped that that coupled with Senator Doyle's excellent amendments, might have persuaded the Minister to think again.
I have to concur with what my colleague, Senator O'Toole, has said, because there are two ways of approaching this. First is the avenue Senator Doyle and I have explored, which is the slur on the professional reputation of an accountant and the breach of natural justice involved in denying that person the opportunity to clear his name. Second, there is the very serious possibility which has been explored by Senator O'Toole, that it may be that an auditor has discovered a deficiency and discrepancy in the books of the Trustee Savings Bank and wishes to draw attention to this in the audited accounts but is dismissed summarily before he can do so and consequently has absolutely no status. Senator O'Toole's argument that this situation was addressed in a previous Bill by giving a person in such a position direct access to a Minister indicates that the Government have already taken this on board and regard it very seriously. There is quite a degree of substance to the amendment.
I realise it has been a long debate and I absented myself for a while but I listened very carefully on the monitor because I wanted to speak specifically on this point because I had been briefed. I urge the Minister to think again. I would like, if I may, to compliment Senator Doyle because it is rare in legislation, and it is particularly rare in legislation dealing with finance, that one comes across poetry. There is no question or doubt that there is poetry in this amendment. What a beautiful phrase: when he "resigns or becomes disqualified, holds office for five years from the expiration by effluxion of time". I will cherish that beautiful phrase and I congratulate the Senator on her superb command of the English language.
With respect, I may have plagiarized.
I would like to support this amendment. Unlike Senator Norris, I wish to apologise to the House that I have not been here for a great deal of this debate. I would like to have been here for a great deal more. It is very unusual for me not to be here for a Bill in which I am interested, but it was unavoidable. I think this is a very important amendment because for a financial institution to change its auditor is a very serious step. The Minister should consider it in this light. The only possible reasons I can think of why an auditor would be changed are for negligence or inefficiency, on his own part, or because he has discovered something which is awkward for those employing him or possibly because somebody has a croney in another company whom he wants to appoint, the latter two reasons being very bad and the first one being very good.
If the editor has been inefficient or negligent his right of appeal would obviously be rejected, but his duties in the other two cases should be paramount. I do not know what the case normally is with banks but I think they very rarely change their auditors. However, in other financial institutions it is not as easy as it is in this Bill. I take, in particular, the case of stockbrokers where the change of auditor — I remember trying to do it for what I thought were very good reasons — is an extremely difficult procedure. Quite rightly it is a very difficult procedure in financial institutions because it is a very delicate and sensitive matter. Certainly, no stockbroker can change their auditor without going to the Stock Exchange and getting full permission from the Stock Exchange, who will not grant it without one providing a very good reason. This in itself, is an appeal procedure for the auditor, because he will not be removed unless there is a good reason. It protects the auditor and the shareholders in that company from actually having the auditor removed for bad reasons. Perhaps the Minister would consider that there is nothing to be lost in the appeal procedure but there is certainly a lot to be gained by giving the auditor this form of Bill. There is a lot to be gained for the owners of the Trustee Savings Banks themselves.
I have listened again with great interest to the desires of the Senators on these amendments. I think I would refer them to section 38, where the auditor is required to report to the Central Bank if he discovers any inaccuracies and so on in the running of a Trustee Savings Bank.
That is if he can get it done before he is removed. That is the whole point.
There is nothing in the Bill which states that his removal from office would debar him from the right to report to the Central Bank on any inaccuracy or anything he had any doubt about. I have been asked what the functions of an auditor would be. The functions of any auditor are very clear in that they have to examine in great detail, appraise, account and verify all the transactions, figures, conclusions on all books, deeds, documents, vouchers and other accompanying documentation in the operation of any company's performance. That is the standard practice pertaining to an auditing function. In section 38 it is clearly stated that the auditor is required to report to the Central Bank.
If he is being removed or if he discovers something with which he is not satisfied, of course he has the right to report to the Central Bank and, of course, he has recourse to the law if he feels he is being unfairly treated. That in itself is the maximum that anybody is given in this country.
But why the discrepancy?
I would like to hear from the Minister which law a dismissed auditor might have recourse to. I do not understand which law it could be. I understand that an auditor is not a strict employee of the company and therefore may well not be in a position to claim under the Unfair Dismissals Act. I would like to stress one point. It is clear in section 38 that an auditor may report to the Minister. It is a bit smart of the Minister to say there is nothing in the Bill which prevents the auditor from making a report to the Minister or to the Central Bank. Of course, that is true. Neither is there anything in the Bill to say what happens if an elephant walks into the Trustee Savings Banks. What kind of nonsense is it to say there is nothing in the Bill to stop him——
You do not expect them to walk in unless they are gone into the zoo business.
If push ever came to shove in this business, people would read this line by line. It is very clear that the auditor has a direct line to the Central Bank. The Central Bank may require certain things of the auditor. I put it to the Minister very clearly that the Central Bank may do nothing if somebody who is no longer an auditor and may no longer seek information from somebody who is no longer an auditor. The auditor who has been dismissed has no right under the terms of this Bill to make a report to the Central Bank. That is fact. There is not the slightest doubt that that is the case. I know very well how smart lawyers would deal with this operation if it happened that the Central Bank decided to move against the Trustee Savings Banks on the report of an auditor who had been dismissed and the Central Bank were purporting to act under section 38 (2), (3) or (4). Any lawyer worth his or her salt would immediately say: "Hang on a second, that person was not an auditor at that time, that subsection of section 38 does not apply and there was no case or ground on which the Central Bank might initiate the legislation". If it ever comes to the time when this section must be tested we would certainly be in deep trouble long before we get to examine it line for line.
It is as clear as day that, if Senator Doyle's amendment is not acceptable to the Minister, all it needs, in effect, is that there would be a period between the decision of the Trustee Savings Banks to dismiss the auditor and the actual dismissal. In other words, there should be some period where the person could make a case for himself or herself or to present information to the Central Bank or to do whatever needs to be done. Why the unholy haste? Why can we not build in some delay mechanism so that everything would be done clearly? The reason we are discussing it is to see that the shareholders and the State and those with an interest in the Trustee Savings Banks can rest more securely.
I want to ramify the point which I think Senator O'Toole has made very well. There is consistent reference in what the Minister says to the auditor. The problem is, of course, one of timing. By the time he is dismissed he has ceased to be the auditor and is plain Seán Citizen. His rights as an auditor cease, presumably, with his dismissal. That I would imagine, cut off his access under this legislation to the Central Bank. I think it also is clear that it would cut off his access to the records, documents and accounts of the Trustee Savings Banks. It is very difficult to know in the situation after the auditor has been dismissed upon what precise factual information he would be able to base a report to the Central Bank without placing himself or herself in danger of libel.
I detect a slight note of impatience creeping into the House as this side try to tease out a very important section. It is understandable, given the day and the hour, but the real difficulty is that this Bill was guillotined on Committee Stage in the House before any of these issues was teased out at length. I have no doubt that if this debate had been in the Dáil most of these matters would have been resolved and we would not now be requesting the Minister to amend the Bill and thereby bring it back to the Dáil to have the amendments accepted there. I know the Minister does not want to take the Bill back to the Dáil because it rises tomorrow for the Christmas recess but, if this House means anything, the Minister must take this and other amendments on board for Report Stage. We are not just in this House for a dress rehearsal, we mean what we say, a lot of work has gone into framing these amendments and there have been excellent contributions from different Members on this side of the House. We are offering a professional, as well as a personal, opinion. We have been briefed and we are not just giving half-baked Opposition views on the Bill.
I appeal to the Minister to accept the amendments on this section for the many good reasons that have been given here. He should not feel inhibited in accepting them because of the difficulty of bringing them to the Dáil before Christmas to have them sorted out. The fact that the Dáil did not think this Bill important enough to debate Committee Stage in detail is not our problem. The Seanad does not have to justify its existence to anyone but ourselves. We have a job to do in thoroughly going through Bills, line by line, and we should be allowed to do that. Our amendments should be judged for what they are and taken back to the Dáil, if necessary.
Some very good points were made and I will not reiterate them. However, one point bothers me in relation to subsection (10) which says that none of the following persons shall be qualified for being an auditor of a Trustee Savings Bank: (a) an officer or employee of the bank (other than an auditor). I cannot understand that in view of the Minister's answer to my point on the amendment earlier. The Minister says that an auditor cannot be an officer or employee of the bank. It does not make sense and there is something wrong with it. That is not just my view, it is the view of the professional body and of the financial institutions. It is a technical or, perhaps, a drafting error and I draw the Minister's attention to it. Perhaps he can explain what it means. The Minister said that an auditor is an independent third party whose relationship with the bank consists of providing a professional service. I agree with that and he cannot, therefore, be an officer or employee of the bank. I am not sure what that reference in (a) means, there is a difficulty and perhaps the Minister will explain it.
Subsection (10) sets out the categories of people who are disqualified from acting as auditors of a Trustee Savings Bank. These categories include any officers or employees of the bank, which would include the trustees, other than an auditor. This is very clear as it means that an officer or an employee of the bank cannot be an auditor. It can only be a professional auditor appointed as an auditor to the bank.
It is not clear.
It is absolutely clear.
There is an implication in certain provisions that the auditor could be an officer or employee of the bank. I know the Minister does not mean that but the implication is there.
I have made it very clear that an auditor in a bank must be a professional auditor so appointed to do the job. It cannot be just an officer of the bank, it must be an auditor.
What about subsection (10) (a)?
Subsection (10) (a) says: an officer or employee of the bank (other than an auditor). The only person who can audit the accounts of the Trustee Savings Banks is a professionally qualified auditor employed by the Trustee Savings Banks to do so.
Subsection (1) says that none of the following persons shall be qualified for being an auditor of a Trustee Savings Bank: (a) an officer or employee of the bank, (other than an auditor). That is far from clear and implies that, in certain circumstances, an auditor might be an officer or employee of the bank.
Not only does it imply that fact, it clearly states that none of the following persons shall be qualified unless he or she is a qualified auditor. That can only mean one thing, it is as clear as day; it means that an auditor who happens to be an officer or employee of the bank is not disqualified from being the auditor of the Trustee Savings Banks. It says that an officer or employee of the bank cannot be an auditor, but then it says "unless that person happens to be a qualified auditor," in which case they would appear to be eligible for employment. I remember two years ago this night — the Government should also have good reason to remember it — I appealed to the Minister not to put through a Bill. I said that it was legislation which could not be implemented. I am saying the same thing tonight. There is a clear problem in regard to the issues we raised. Two years ago I told the Minister that I had discussed it with people in the know and all the information we have been given indicates that there are problems in regard to this Bill. If there is a problem, why should we push the Bill through? If we pass the Bill it will certainly lead to difficulties somewhere along the line. Why are we trying to force the Bill through?
I want to add my professional weight to the interpretation of the English language by Senator O'Toole. It is perfectly clear, there is no question of doubt about it, there is a drafting error and the section clearly states that the Bill contemplates a situation in which an auditor who is an employee can be appointed. The point has been well made by Senator O'Toole. I take this as a very clear indication that a substantial, important, technical amendment which has the full force of logical argument behind it, is not being taken on board by the Minister because of the difficulty with regard to the Dáil. This is the test case. I am astonished that the Minister would brush aside the very careful and detailed briefing given to a number of Senators by the senior body representing the accountancy profession. The argument that the Minister did not have advance warning of this could not be sustained because I put a great deal of this on the record on Second Stage. I will be very surprised if this amendment is not accepted.
I do not share the Senator's concern regarding this matter. Section 36 is absolutely clear on the professional qualifications needed to be an auditor in a Trustee Savings Bank. Subsection (10) is explicit in the title or qualification of officers who can be auditors. It is very clear. Subsection (10) states that none of the following persons shall be qualified for being an auditor of a Trustee Savings Bank: an officer or employee of the bank (other than an auditor).
An officer or employee could possibly be employed, is that what the Minister is saying?
No. It is absolutely specific but the Senator is taking one subsection and interpreting it as the entire section. I will go through them, (b) a person who is a partner, an employer or employee of an officer or employee of the bank (other than an auditor). This means a professional auditor under the section. (c) A body corporate, (d) a person who has been an officer or employee of the bank within a period in respect of which accounts would fall to be auditied by him if he were appointed auditor of the bank. It is absolutely clear that you cannot have a staff member of a bank, an officer or an employee who may become a qualified auditor, who has been working on those accounts. The paragraphs state:
(e) a spouse (or a person living together with an officer of the bank as a spouse) parent, step-parent, child, step-child, brother, sister, half-brother or half-sister of an officer of the bank,
(f) a person who is disqualified under the Companies Acts for appointment as auditor of a subsidiary or holding company...
But it is only subsection (a) with which we have the problem.
I am absolutely delighted if the Senator only has a problem with subsection (a) because it is very clear that a professional auditor only, so employed and appointed may become an auditor to the Trustee Savings Banks. If that person happens to be an officer or employee of the bank they are debarred from becoming that auditor; they are debarred while——
May I ask a question. May I point out an issue. May I be allowed read it without the parenthesis, that is section 36 (10) (a):
None of the following persons shall be qualified for being an auditor of a trustee savings bank:
(a) an officer or employee of the bank...
That means that an officer or employee of the bank shall be debarred from becoming an auditor. Now we say but there is only one way in which we could allow him or her to become the auditor, that is if he or she is a qualified auditor in the first place. There is no doubt about that; it is written there. We are facilitating the appointment of an employee of the bank as the auditor——
That is right. Why else is it there?
It has to mean that. That is exactly as it is written there.
I really have got to add my voice once more to this. I must emphasise the force of the phrase which reads:
None of the following persons shall be qualifies for being an auditor of a trustee savings bank:
(a) an officer or employee of the bank (other than an auditor),
which means that, unless he or she is an auditor — I stress unless he or she is an auditor — and if he or she is an auditor then they shall be qualified. Nothing could possibly be clearer. The Minister has signally failed to address that point. It specifically permits and facilitates the appointment of an employee of the bank if such an employee is qualified as an auditor. That is the only possible construction that could be put either linguistically or legally on that phrase. It may very well not have been the Minister's intention but nonetheless it is the effect in language and in law. I am greatly troubled if this causes the Minister difficulty, if it causes the Government difficulty, if it means that the Dáil must sit another day or if it means that the passage of the Bill has to be postponed temporarily. But I am sure the Minister will agree with me that he would not wish a Bill that contains so serious a flaw to be allowed pass into legislation because it could lead to corrupt practice. As I understand it, that is what the Minister wishes to extinguish.
I am absolutely certain — it is my own personal interpretation — and the legal advice available to me is that an officer of employee of the bank who is not a professionally qualified and employed auditor cannot become an auditor of the bank.
Quite——
We agree with that point. What is the opposite?
We know that, that one who is a qualified auditor could, according to this section——
——be employed.
Provided that under subsection (d) that person was not involved in the accounts of which he is about to audit.
That may well be. The Minister has made the point for us. He is saying that an employee of the bank, provided he or she is a qualified auditor, could be considered for appointment.
Exactly.
Is that what the Minister wants? Why cannot we be straight and honest with each other here? The Minister has led us to believe that that is what he is opposed to.
I am absolutely straight and honest. I do not like that inference. It is not the first time the Senator has done so in this House as far as I am concerned. I take exception to it.
For the record let me withdraw any inference——
May be we should not play games with words but the Senator will not bully me.
Let me, for the record, withdraw any inference of——
Acting Chairman
Will the Senator please resume his seat.
The point I wish to make for the record is that the Minister asked me to withdraw words.
I did not ask the Senator to withdraw words. I said I took exception to what Senator O'Toole said because the Senator inferred that I was not straight or honest. This is the second time as far as I am concerned in my seven years as a Member of the Oireachtas that the Senator had done that. It has never been said by any other Member of either House to me. I take exception to it; it is derogatory on the part of the Senator——
Excuse me, I will not listen to this outburst. You must put order on this House, Sir, or else you throw me out of here. There is no way I am going to listen to this rubbish. There was no implication of any kind vis-à-vis the Minister. If he wishes to draw something from it; I do not know what he is talking about; I had no intention of insulting him; I had no intention of impugning——
Acting Chairman
Senator O'Toole, please resume your seat.
The Senator said: "let us be straight and honest with each other". The Senator inferred that I was not straight and honest——
I did not so infer.
Why did the Senator use those terms then? What do they mean? I have been lectured by the Senator for the past few minutes about the English language. As far as I am concerned, I take my interpretation of what is said in this House as much as Senator O'Toole is entitled to take any other interpretation. It is quite clear from this section that nobody can become an auditor of a bank unless he or she is a professionally appointed, professionally qualified auditor. I might quote subsection (d): where it is clear that:
A person who has been an officer or employee of the bank within a period in respect of which accounts would fall to be audited by him if he were appointed auditor of the bank,
cannot be appointed to do so. It is categorically clear. There is enshrined there protection of the quality of the accountancy and the auditing to be done. I do not think it could be made any clearer.
I propose that the section be now put.
I would like to amend that and request the Leader of the House, in the interests of the orderly passage of this most important Bill, to accept that this is a technical drafting error. If I may be so bold as to put it this way: please let us finish it out.
I propose that the section be now put.
Acting Chairman
The Cathaoirleach has to be in the Chair for that procedure.
It is my amendment on which we are speaking and I urge that we finish this. It is not my opinion, it is not even the opinion of the Senators behind me, but it is the opinion of the Consultative Committee of Accountancy Bodies in Ireland, the premier accountany body in this country, that section 36 (10) (a) will cause major problems. I know there are logistical difficulties as far as he is concerned — not as far as we are concerned — in returning to the Dáil with any amendment that may be taken on board here——
If I may intervene, the Senator should not refer to the Minister as "he".
Acting Chairman
Senator Doyle, without interruption.
I did not mean to be disrespectful as far as the Minister is concerned. I stand corrected; I beg your pardon, Minister, I did not mean any disrespect by referring to you as "he". I think tempers are getting a bit frayed and that that was an unnecessary intervention. I really do feel there is a problem. That is not my view; it is the view of the professional bodies involved and of the Trustee Savings Banks themselves. Notwithstanding those logistical difficulties, could the Minister please concede this point which is extremely ambiguous. In fact, the view of the CCAB is that this section effectively means, as at present drafted, that the auditor could be an officer or employee of the bank, which is not what we want. We want them to be independent, third persons.
If I may be so bold as to address a remark to the Leader of the House, through the Chair, this Bill was guillotined before it reached this amendment on Committee Stage in the Dáil so this point was not picked up. Had it been picked up it would have been resolved there and we would not be experiencing this difficulty here today. That is why so many of the sections are causing problems here. We need to deal with it. It is the responsibility of Senators that we put in place what they did not do in the Dáil. I know the day, the time and logistics may cause problems but we cannot renege on our responsibilities in the Seanad as a result.
I would not make any implication at all here to the Minister. He is a very decent, honourable, upright man.
Thank you, Senator.
However, having said that, the Minister has indicated a degree of movement in his last response which suggests to me that he is beginning to take on board the points we are making because the argument we had was that the section, as phrased, did permit a person who was an employee of the bank to be the auditor. The Minister has, very honourably, honestly and directly at last acknowledged that this is so. He said that in his last response but he went on to defend the position by saying that, while this was so, an employee of the bank could not audit the specific accounts of a section for which he had been responsible, or something like that. However, I am sure the Minister would agree with me, having advanced this far, that nevertheless there remains the possibility of a conflict of interest. That is the principle at which we were all trying to get in attacking this section. I am not impugning the honour of the accountancy proression, but there is clearly a conflict of interests in the position of somebody who is an employee of a group auditing the accounts, even of a section of that group for which he or she was not primarily responsible.
I accept that the Minister has gone a certain way with us because he had originally dismissed the possibility of interpreting the section in the manner in which we had done; however, he is now interpreting it in that fashion himself but he is hedging it with a further set of restrictions from another part of the Bill. Let us get into that area if we must but I have to advise the Minister that it clearly indicates to me the existence of a professional conflict of interests, and I really think that the Minister must take that on board.
It is quite clear that this section does not contemplate an employee being appointed as auditor under any circumstances. It is clear from what we have said on all sides that this is not the case. In fact, an auditor could be an employee of a company under certain circumstances. There may be conflicts of time where the person happens to be working, but there is no doubt that an employee could be appointed as auditor.
When I used the phrase to the Minister "Let us be honest with each other", I did not impugn anything. It is no more than a turn of phrase. The Minister may interpret that phrase as much to my disadvantage as to his own. I have too much respect for the Minister to say that. I do not believe in cheap shots like that, and that was not my intention at any time.
I accept what Senator O'Toole said and I appreciate his elaboration of the point.
In response to what the Senators have said, I would like to try to clarify the matter beyond any doubt. As section 36 (4) deals with the qualifications needed to be eligible for the position of auditor to a Trustee Savings Bank, he must either be a member of a body of accountants recognised for the purpose by the Minister for Industry and Commerce or be authorised by the Minister to be an auditor by virtue of having gained similar qualifications elsewhere, or by having adequate knowledge and experience or by having practised as an accountant in Ireland before 1 April 1964. The bodies which are recognised by the Minister for Industry and Commerce are the Institute of Chartered Accountants in Ireland, the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland, the Institute of Certified Public Accountants in Ireland and the Chartered Association of Certified Accountants. It is only a person with qualifications from those bodies, and recognised by the Minister for Industry and Commerce, who can become an auditor of a Trustee Savings Bank.
Except by implication on subsection (10) (a). We agree with the Minister there but subsection (10) (a) confuses the matter.
The position as regards subsection (10) (a) is absolutely clear. That provision is included so that there can be no prohibition on a staff member, an officer or an employee, of a Trustee Savings Bank going to university to do a particular course to become qualified as a professional public auditor under the relevant bodies which are recognised by the Minister for Industry and Commerce. There can be no discrimination on the rights of a staff member, an employee or an officer, to become a qualified accountant. As a result of that qualification being conferred on him or her, under subsection (10) (d) that person is further debarred from auditing any accounts while he or she was working on those accounts as an employee or an officer of the bank.
I would ask the Minister to listen to the conditions I put to him, and this encapsulates what I am concerned about. Let us assume that next February when this Bill is in operation a person is appointed an employee of a Trustee Savings Bank, and he takes up duty some time in mid-January or early February. That person is then an employee of the bank but he was not an employee previously. As outlined under subsection 36 (4), he also happens to be a person qualified for appointment as an auditor and fulfils all the qualifications. He is an officer and an auditor as outlined in subsection (10) (a). He has not been working as an employee of the bank during the period for which the accounts were to be audited, in other words, the last financial year. Can the Minister explain under what section or subsection that person would be debarred from operating as an auditor of the bank? My understanding is that the person fulfils all the requirements — he was not an employee during the period to be audited, he is fully qualified as an auditor and he is now an employee.
I appreciate what Senator O'Toole says. He paints a scenario that probably could be considered, but it is my understanding that an officer of the Trustee Savings Bank cannot become an auditor for that bank's accounts. An auditor who is appointed may, for a specific purpose, be regarded as an officer if necessary. In other words, if an auditor is appointed as an auditor to the bank he may be regarded as an officer of the bank. He has a professional qualification which means he is an auditor. If the auditor being appointed is to audit the accounts, he must be appointed solely to audit the accounts or to replace another auditor. He cannot just be taken on to the staff and told: "There are the accounts; audit them". There can be only one auditor. He must have proper professional qualifications and he must be appointed to do the audit specifically. That is his sole function.
There is no disagreement on that point.
We all agree with the Minister on that.
Neither is there disagreement, although I do not fully understand it, on the retrospection where somebody who is an auditor can be considered in certain circumstances to be an officer. I understand certain aspects of the company law where that could be the case, but certain difficulties are created here and I will spell them out again. If somebody is appointed on 1 February as an employee of the company — let us say, a manager of a branch — he is also fully qualified as an auditor and has never worked in a Trustee Savings Bank before, under my reading of the legislation — and the Minister has confirmed it now — that person could be appointed as the auditor of the company.
Not as auditor of the company.
He or she has all the qualifications, is an employee of the bank and also a qualified auditor and therefore is not debarred under subsection (10) (a) and he was not working for the bank during the period of the accounts to be audited. In other words, the person was not working for the bank during that financial year, the reason being that he was on a career break, studying to become an auditor. He had been working for the bank before he took the career break and he has now come back, fully trained, to his old job as manager of the branch and under the legislation is perfectly entitled to be appointed auditor. I believe that was never contemplated by the legislation.
Has the Minister not made it clear that in those circumstances he might be regarded as an auditor for a simple specific purpose within the bank as distinct from auditor in general for the whole account of——
We do not distinguish between different types of auditors in this section and that is the problem.
That obviously is the intention.
Let us define auditor then. There is an omission if auditor is not defined.
We have defined it already.
Where does it comply with what is being suggested by Senator Fallon?
Section 36 (4) clearly defines auditor and who can become an auditor.
Auditor of what, the branch or the company?
Auditor of the Trustee Savings Banks.
That is not what Senator Fallon was talking about.
In response to Senator O'Toole, I would say that that person could only become auditor from the time he was appointed auditor. He could not be appointed as an auditor of the bank and subsequently given the job of auditorship. That could not happen.
It could.
No, it could not.
The problem is that it is ambiguous. I know the Minister does not want this to happen——
I cannot see the ambiguity.
We are going to have to resolve this point. It is not just our view; it is the view of the professional bodies, who are urging that this is a most serious issue which should be resolved. I do not want to lose sight of my amendments and the principle of an appeals procedure for accountants. Apparently, this section does not deal with the resignation of a auditor, which it should do. This is only one of the many problems in this respect.
I think the Minister is clearly taking on board the sense of much of what we are saying. It seems to me from his last statement that he quite clearly accepted that somebody could be appointed as an auditor and remain an employee of a Trustee Savings Bank. I do not fully comprehend the import of what Senator Fallon said. He seemed to suggest that there were different degrees of accountancy, responsibility and so on——
It could be within a bank.
It could be, but I do not think it is a good idea in any case. I do not think it is a good idea for somebody who is a manager of a Trustee Savings Bank branch to be in a position to audit the accounts of his own branch.
I did not say that.
That is the microcosm of the situation we are addressing now.
I also accept that there has clearly been movement on the part of the Minister. First, he was reluctant to accept the interpretation we placed on this provision; but, eventually, he accepted it and hedged it around with further qualifications. He now seems to be moving towards the position that perhaps in some remotely possible situation this kind of eventuality might arise. But it seems to me this is precisely what accurate drafting of legislation is all about — that loopholes should be closed off at this stage. Nothing I have heard from the Minister answers the essential nub of the argument which I made earlier on this evening, that is, what we are looking at here is a clear possibility of conflict of interest. I do not think financial legislation in particular should permit of conflict of interest. I am convinced this exists and I regret that we have to tease it out in this manner. We are not doing this to be tendentious at all. But, given the degree of movement the Minister has shown in understanding our interpretation of this provision, I honestly believe that if we stick at it we can convince the Minister of what we are saying and he may, with great reluctance, be prepared to accept the amendment. I recognise the difficulties this may cause with his colleagues, but in order to make good legislation I believe this may very well be necessary. It is very important that the Seanad should be used for this purpose. This is one occasion on which I welcome very positively the existence of a rejected politician from the Dáil——
Thank you very much.
That matter was raised today and I had to defend it in the other House.
——because Senator Doyle is able to say that one of the reasons these amendments were put down was that the legislation was guillotined in the Dáil. For that reason I find it particularly offensive that the Leader of the House should bounce in and try to intimidate us by waving a guillotine in front of us. I should like to serve notice on this House that if that is attempted it will be resisted in a manner which will be particular uncomfortable for those who attempt it.
Senator Maurice Manning.
May I make a brief comment before Senator Manning gets in? Senator O'Toole referred to a scenario where a branch manager of a Trustee Savings Bank may take a career break and come back as an auditor.
I did not say that; I said he may come back as a manager.
I apologise. He may come back as a manager but he will also be an auditor. Could a manager not be engaged by the bank as an auditor in the preparation of bank projections for the year ahead, 1992, or whenever? That is the scenario I see arising. Will the Minister comment on that aspect?
I should have ensured that Senator Manning got in, first.
My apologies.
I have been listening to this debate fairly carefully for most of the day and it strikes me that we have reached somewhat of an impasse at this stage. Senator Norris said he hoped the Minister would take on board what he was saying. I suspect that persuasion will not work tonight. It seems that this Bill is fitted into the Government time table and I would like to try to undo that. When do the provisions of this Bill come into effect?
The provisions of the Bill will come into effect as soon as it is signed into law by the President.
Is there a great urgency about it? I believe this is a classic case of a Bill which was guillotined through the Dáil and there are very serious doubts about it. If there are doubts about the Bill it should not go through. On my first day in this Seanad I heard Senator Michael Howard, who is a very experienced Senator, saying to one of the new Senators: "If you are not clear and there is not total clarity then the Bill should not go through". We are quite happy to sit for two days next week, if needs be, to have this Bill teased out. I have been very impressed by the arguments made by my three Independent colleagues and especially Senator Doyle. There arguments are very well founded and they have genuine doubts. I believe that, in the face of the very real doubts which have been raised, we will be doing ourselves a disservice if we push this Bill through. Speaking on behalf of the Fine Gael group, we would be more than happy to come back next week or early after the Christmas recess to fully discuss this Bill. I am sure the Independent Senators feel likewise. We are not doing this in any tendentious sense. We want the Seanad to be used properly and to see the right legislation going through.
I am happy to debate this matter and I have not suggested at any stage that we should guillotine the Bill. I am prepared to stay here all night long if it means debating the Bill section by section, line by line. I have no difficulty with this. I respect the Legislature and the right of people to have an input into this debate.
To clarify the question asked by Senator Fallon, I see no difficulty in a qualified professional auditor being appointed as an employee or officer of a bank.
It is the other way around.
He can carry out several functions. I want to put it clearly on the record that only a qualified auditor, qualified through the professional bodies and acceptable to the Minister for Industry and Commerce, and be appointed a professional auditor by a Trustee Savings Bank to carry out the audit of that bank. It is not just any officer who can be appointed to carry out the audit. He or she has to be fully qualified and clearly appointed to do that job. They may not under any circumstances audit accounts for the period during which they dealt with those accounts. I do not think I can make it any clearer than that and I ask the Senators to accept that.
Is the Minister saying there is no question of us taking this Bill a few days down the line so that he can consider the points we have made and come back to the House? The Government may end up have to fight a very expensive case in the courts a few years down the line because of what may well be an error in drafting or a lack of clarity in the legislation. Without pushing the point, all we are saying is we are quite happy to spend time next week debating the Bill so that matters can be clarified and there will not be a cloud of doubt hanging over the Bill. We are happy to stay here all night also, but I do not believe the legislation will be served by victory going to those with the strongest bladders or whoever happens to stay longest. Sorry, that may be slightly indelicate.
I am drinking a lot of water.
It seems the Minister has retreated a little bit because he does not quite understand the points we are making. There is no objection whatsoever on this side of the House to somebody who manages to qualify as an account being employed by a Trustee Savings Bank. There is no Luddite lobby on this side of the House which says that advanced education of any kind shall be a bar to employment. What we are saying is that an employee of a bank so qualified in the practice of accountancy should not in any circumstances be employed as an auditor of any function of a bank.
Despite the intention of the Bill the section permits that possibility which, I agree, may be remote. It is my belief, although I accept I may be wrong, that Senator Fallon has failed to differentiate between the functions of an auditor, on the one hand, and those of an accountant on the other. Of course, an employee of a Trustee Savings Bank who had certain skills could employ those skills in making financial projections. That is not the principal function of an auditor; it is the principal function of an accountant who may in certain roles be an auditor for a company or not. There is nothing to prevent somebody so qualified preparing a set of projections for their own bank but we seek to prevent an employee of the bank auditing any section of the bank's operations.
I should like to clarify the point at issue for Senator Fallon. I am not making the point that a person who is a qualified auditor cannot become an officer or an employee of a company. I agree that it might be useful to employ a person with an auditor's qualifications in the company but that is not the issue; it is the cart before the horse. What I am referring to is the person who was an employee, who may have taken a career break or was away from the company for one year, and returns as a qualified auditor to his position as a branch manager. There is nothing wrong so far and that person's skills might be used to the best effect within the company but it is the next step that I am concerned about. Under the Bill that person could be appointed as the auditor of the bank. He is not excluded on the qualification issue. We are all agreed on that and it will not be necessary to refer to it again. We are all agreed that in certain circumstances an appointed auditor could become an officer. However, I am referring to an employee of a company who is qualified as an auditor being appointed as the auditor for the bank provided he or she was not in the employment of the bank during the previous 12 months.
If one was to accept the view expressed by Deputy Norris then a medical doctor who wishes to be employed in the Department of Health will be debarred from taking up such a post. I do not see anything wrong with a qualified auditor being employed by a bank to improve its accountancy system and so on.
Nobody is objecting to that.
It is clear that under the Bill only a professionally qualified person can be appointed as an auditor and that if that person has been involved with the accounts of the company for a particular period he or she cannot be employed as an auditor.
If there was a question of medical malpractice in the hospital which employed the doctor it would not be the existence of the qualification but his or her relationship to the institution as employer that would naturally disbar that person from acting as a member of the malpractice tribunal. I am most grateful to the Minister for allowing me to use his illustration to put the point more forcibly. I hope I have clarified the matter for the Minister.
Amendment put.
Vótáil.
The question is: "That the amendment be made." On that question a division has been challenged. Will Senators claiming this division please rise?
More than five Senators stood.
The division will now proceed.
The Committee divided: Tá, 6; Níl, 13.
Tá
- Doyle, Avril.
- Manning, Maurice.
- Naughten, Liam.
- Norris, David.
- O'Toole, Joe.
- Ross, Shane P.N.
Níl
- Bennett, Olga.
- Byrne, Hugh
- Cassidy, Donie.
- Fallon, Sean.
- Farrell, Willie.
- Finneran, Michael.
- Fitzgerald, Tom.
- Hussey, Thomas.
- Kiely, Rory.
- Mooney, Paschal.
- Mullooly, Brian.
- O'Brien, Francis.
- Ryan, Eoin David.
Tellers: Tá, Senators Norris and Ross; Níl, Senators Farrell and Hussey.
Amendment declared lost.
Amendments Nos. 30, 31 and 32 have already been discussed with amendment No. 29. Are the amendments being withdrawn?
No. To my knowledge amendment No. 32 has not been put.
Is the Senator pressing it or is it being withdrawn?
No, it is not being withdrawn.
Amendment Nos. 30 and 31 not moved.
I move amendment No. 32:
In page 29, subsection (10) (a), line 6, to delete "(other than an auditor)".
Would the Minister consider this amendment before Report Stage? We discussed the amendment at great length recently. We are concerned about the technical difficulty with the drafting. The amendment proposes to delete the words "(other than an auditor)" from subsection (10) (a) of section 36.
I must put the question, Senator, because this amendment has already been discussed.
Perhaps the Minister would come back on Report Stage on this amendment.
I am ruling that the Senator may not discuss this matter further and I am now putting the question. I am putting the question: "That the words proposed to be deleted stand." I think the question is carried.
Vótáil.
The question is: "That the words proposed to be deleted stand". On that question a division has been challenged. Will Senators claiming this division please rise?
Five or more Senators stood.
The division will proceed.
The Committee divided: Tá, 14; Níl, 6.
Tá
- Bennett, Olga.
- Byrne, Hugh
- Cassidy, Donie.
- Fallon, Sean.
- Farrell, Willie.
- Finneran, Michael.
- Fitzgerald, Tom.
- Hussey, Thomas.
- Kiely, Rory.
- Lanigan, Michael.
- Mooney, Paschal.
- Mullooly, Brian.
- O'Brien, Francis.
- Ryan, Eoin David.
Níl
- Doyle, Avril.
- Manning, Maurice.
- Naughten, Liam.
- Norris, David.
- O'Toole, Joe.
- Ross, Shane P.N.
Tellers: Tá, Senators Farrell and Hussey; Níl, Senators Doyle and Manning.
Question declared carried.
Amendment declared lost.
Question proposed: "That section 36 stand part of the Bill."
Is section 36 agreed?
No.
I would like to be recorded as being opposed.
I would like to be added to that list as a matter of principle. I am vehemently opposed to it.
Question put and declared carried, Senators Doyle and O'Toole dissenting.
Sections 37 to 42, inclusive, agreed to.
SECTION 43.
Amendments Nos. 33 and 34 not moved.
Section 43 agreed to.
Sections 44 to 52, inclusive, agreed to.
SECTION 53.
Amendment No. 35 not moved.
Section 53 agreed to.
Sections 54 to 56, inclusive, agreed to.
SECTION 57.
Amendments Nos. 36 to 43, inclusive, not moved.
I move amendment No. 44:
In page 42, between lines 34 and 35, to insert the following subsection:
"(12) An order under this section shall not be made by the Minister for Finance until arrangements for employee shareholding in any company so reorganised by the Minister shall have been made by him.".
I do not have to spell out to the House the benefits of employee shareholding. This principle has been well established among many companies and among the many successful companies, the employees are inclined to give of their best and more than they might otherwise be inclined to give if they feel they have a direct contribution to the profitability of the company and if their representative is on the board of the company representing them. I fully believe in that principle of employee shareholding and of employees sharing in the profits of a company. Such companies are likely to have increased profits to distribute among their shareholders. In this case the employees will benefit if there is total co-operation between employers and employees. One of the most beneficial vehicles for co-operation, open and free dialogue and the resolution of problems is employee shareholding on the board of any company, and I so propose.
I note with an interest what Senator Doyle proposes. She wants to oblige the Minister to make provision for employee shareholding before any order converting the Trustee Savings Banks to company status is made. However, I do not think it is appropriate at this stage to make such provision. It can be considered if and when the Trustee Savings Banks are being converted to companies and an order is being drafted. If this was to be done and if this conversion and change of status were to take place, then it would have to be taken back to the Houses of the Oireachtas. It would be appropriate at that stage that the proposed amendment which Senator Doyle has recommended here would be considered. It is unnecessary now to include it here and I trust the Senator will be able to accept the bone fides of what I say.
Am I right in interpreting the Minister as saying that when the matter comes back to the Oireachtas it will be by way of affirmative resolution, so some discussion could be had on this? Is my interpretation correct?
Absolutely.
On that basis, I am prepared to withdraw my amendment.
Amendment, by leave, withdrawn.
Section 57 agreed to.
Sections 58 to 66, inclusive, agreed to.
First Schedule agreed to.
SECOND SCHEDULE.
Question proposed: "That the Second Schedule be the Second Schedule to the Bill."
Given the considerable debate we had on the whole procedure for appointing trustees, the fact that we are virtually giving them life tenure, the fact that we have not detailed how they may be removed if incompetent and not contributing to the board and the fact that we are bringing in an upper age limit of 70 notwithstanding the competence of the individual in question, will the Minister please expand as to what paragraph 2 on the Second Schedule, namely, the manner of appointment and removal of trustees of the bank, means?
In support of what Senator Doyle has said, perhaps we overlooked the Second Schedule when we discussed the Bill this afternoon and this morning. Clearly there is a great deal in the Schedule which is very important. Senator Norris asked whether there was a payment to trustees. Subparagraph (8) provides that a trustee should not derive any benefit from the bank other than any honoraria pursuant to section 20. The question of worker directors could well be taken on board in the Second Schedule and could well meet Senator Upton's aspiration in his earlier amendment. I think the effect of this will be that the Trustee Savings Banks will consult with the Central Bank and they will agree on rules concerning what is best with regard to appointment and removal of trustees. It should not present problems.
The Second Schedule contains the minimum which will be acceptable to the Central Bank by way of rules which shall be put forward by the Trustee Savings Banks to the Central Bank as a result of the passing of this Bill. It is incumbent on the trustees to put forward the set of rules to the Central Bank for their adjudication. There may be several other matters included in the rules to the Second Schedule provided they do not conflict with the Act.
That covers some of the points that have been so well made by many Senators here pertaining to directorships, deposits, type of deposit books and so on. All these matters can be included in the Second Schedule but what is proposed in the Schedule is the minimum that is acceptable so that there shall be total adherence by the Trustee Savings Banks to the Bill that the House has just debated.
Question put and agreed to.
Title agreed to.
Bill reported without amendment.
Question proposed: "That Report Stage be taken now."
Perhaps I am coming in a little too early on this, but on a point of information if it is not proposed to take Report Stage this evening then we would not vote against the passing at this Stage but if Report Stage is proposed to be taken this evening we will have to vote against the remaining Stages.
It is proposed to take Report and Final Stages this evening.
Not agreed.
On behalf of the Independent group let me say I am absolutely horrified at the idea of taking Report Stage this evening. Committee Stage of this Bill, to which I openly admit I was a very late contributor, has been extremely contentious and, to say the very least, totally unsatisfactory in terms of explanations given to us this evening. Issues have been raised mostly by Senator Doyle, and I congratulate her, which cause great difficulties to those explaining the Bill partly because these issues were never debated in the Dáil. It seems absurd and in contempt of this House that we should rush this Bill through, it having been guillotined in the Dáil. These issues which have been raised on Committee Stage and which the Minister in one case has promised he would consider on Report Stage seem to me so important that they should be delayed until next Tuesday.
The Minister's promise to consider things on Report Stage rings very hollow if there is some rush to get Report Stage in tonight. I think we could meet the Minister on his need to get this Bill through in a rush by Christmas or to consider it again by Christmas, although I do not understand the reason for the rush. I ask him very sincerely to consider deferring this until next Tuesday or Wednesday, or tomorrow or some other time. It is absurd that tonight, having had this debate where totally unsatisfactory replies have been given, we rush it through in contempt of this House. I ask the Minister to put it back to a time when we can discuss these issues in depth again and when he is prepared to consider them seriously.
What is the urgency? We are willing to come back for Report Stage next Tuesday or Wednesday. The House is sitting anyway. Some major points have been raised which the civil servants and the Minister will need to ponder. There is no need for this steam-rolling this evening. We will have potentially explosive, bad legislation rushed onto the Statute Book late on a Thursday evening. We have raised serious points which need to be considered further. The civil servants and experts need to be asked to take a further look at the Bill in the light of the points made. They and the Minister may well be right but I think there are areas where almost certainly they are wrong. We are asking that they come back next Tuesday or Wednesday with a considered view of what has been said this evening. It would be a contempt of this House and of the Oireachtas if this Bill, large parts of which were guillotined through the Dáil, were never considered in detail. A financial measure should be gone through line by line where there is any question of doubt. Unless legislation is crystal clear, it should not leave these Houses.
We are not seeking a victory for the Opposition over Fianna Fáil and the Progressive Democrats or a victory over the Minister. We are asking that Report Stage be deferred until next Tuesday or Wednesday in the interests of the job we are asked to do in this House and in the interests of good legislation. There will be no obstruction but rather a constructive contribution to the debate. All of us can consider the issues in the interim. We make this plea to the Minister to respond to the spirit which has prevailed on this side of the House and on the part of Senator Fallon and others in this debate.
I should like to add my voice very strongly to what has been said. There is an issue of principle here which extends beyond the specific provisions of this Bill. If this Bill is steamrolled through, having been guillotined on important sections in the Dáil where there was no discussion of precisely the matters we have teased out — some of the matter we have been able to examine in detail has begun to be taken on board by the Minister — it will show a contempt for the role of this House as part of the Oireachtas. It also shows a contempt for parliamentary democracy. It will indicate that the Government feel that by virtue of having a majority they can force their measures through without any degree of participation, particularly by the Upper House. That essentially renders this House redundant. The Government can guillotine their legislative programme and force it through but it would be very dangerous. It is dangerous because we have clearly highlighted cruxes in the Bill on which the Minister, despite his valiant efforts and the efforts of his advisers, has been quite unable to satisfy a large section of the House.
It must be emphasised again that this is not just a view taken for the sake of opposition by an Opposition; it is an informed view. That view is informed by very senior elements within the accountancy profession. We have dealt with quite complex matters and I believe strongly that it is important that the Minister and his advisers have the opportunity to reflect and have further consultation, examing the Bill in the light of the discussion here to see if there is a way to incorprate some of the most serious and cogently argued amendments. If this process is not allowed to take place it will be a flagrant contempt of this House, a contempt of democracy and a contempt which will prove expensive at some stage in the future, be it five or ten years. I am convinced there will be a court case and the people of Ireland will pay the bill. I do not believe that simply to get the early passage of a Bill it is worth paying the price of having defective legislation which will cost the people dear at the end of the day.
None of us particularly wanted to be here this evening as late as this. There is no political masochism on this side of the House. We all have other engagements and none of us anticipated being here. There is no intention to be tendentious or difficult but it is a very serious point. I hope that the Minister, perhaps after some consultation with his colleagues in the Government, will be able to give an undertaking that the Bill will not be put through all Stages this evening. I am afraid that if such an attempt is made there will be a serious row.
I have known the Minister and have worked with him on different Bills. I was in his shoes as I took different Bills through the other House. I was also in this House and I understand fully the Minister's position. Knowing him personally, I would ask him to consider that he gave me his word this morning — and I respect him as a man of his word — that he would consider issues on Report Stage. If that is to mean anything it must mean that we cannot rush from Committee Stage straight into Report Stage, particularly on the three or four sections which have proved very difficult. I know we have had a long session and everyone is getting somewhat tired, but there are these sections which deeply concern us and the financial bodies. The Minister has had a job to do and was given stripes coming in here tonight. He has battled well but he has not managed to convince us on the three or four sections about which we are concerned.
I would also thank the Leader of the House for his commitment last week that he would not guillotine this debate. To be fair to him, he has allowed us to debate it at length and very thoroughly. It is in the interests of this House that it is so and we have all done the House a particular service by going through this Bill line by line when the Dáil chose not to do so. It would be a pity to spoil the lot for a hap'orth of tar, as it were. Given the nature of Report Stage, two and a half hours next week would complete it. To allow the Minister to stand by his word to me and other Senators that he would consider issues on Report Stage, I urge that we leave it until next week.
We have completed Second Stage and Committee Stage and I agree with Senator Doyle regarding amendments. My understanding is that the only section which the Minister agreed to examine on Report Stage was section 23 (6). While there was much debate on other sections, that is the only section which the Minister agreed to examine on Report Stage. If that is the case, it will not take much time. I am sure he has considered his position by now.
I do not think that gives the complete picture. There were other matters which we asked the Minister to consider on Report Stage. I will be quite happy to take the Minister's own amendments — I am not particularly interested in my amendments or the literal amendments of other Senators — provided the principle of the issues is considered. I think the Minister knows what we are referring to.
An Leas-Chathaoirleach
The Senator may not speak twice on this issue. She has spoken already.
I did give a commitment that I would reconsider section 23 (6) on Report Stage. I was asked to reconsider another section but the Cathaoirleach ruled out any reconsideration of it and said the question had to be put. I will give my commitment and respond on section 23 (6). I can confirm——
Are we agreed that we are taking Report Stage now?
No.
We are pleading with the Minister to be reasonable. Two hours next week will resolve the difficulty.
I will respond on Report Stage.
Two hours next week will resolve the difficulties.
I am putting the question.
We have not come to Report Stage.
We have been debating whether we will take Report Stage now. We have been asking the Minister to agree to take Report Stage next week. On a point of order——
I am putting the question: "That Report Stage be taken now".
On a point of order——
The Deputy cannot raise a point of order because I have put the question.
I raised the point of order, a Chathaoirligh, before you put the question.
Will the Senator please resume his seat?
May I make a point of order——
I have put the question.
A Chathaoirligh, with great respect I have to say that you were not here during the past half hour.
I am asking the Senator to resume his seat, otherwise he will be named.
Question put.
Vótáil.
The question is: "That Report Stage be taken now". On that question a division has been challenged. Will Senators claiming this division please rise?
More than five Senators stood.
The division will proceed.
The Seanad divided: Tá, 14; Níl, 6.
Tá
- Bennett, Olga.
- Cassidy, Donie.
- Dardis, John.
- Fallon, Seán.
- Farrell, Willie.
- Finneran, Michael.
- Fitzgerald, Tom.
- Hussey, Thomas.
- Kiely, Rory.
- Lanigan, Michael.
- Mooney, Paschal.
- Mullooly, Brian.
- O'Brien, Francis.
- Ryan, Eoin David.
Níl
- Doyle, Avril.
- Kennedy, Patrick.
- Manning, Maurice.
- Naughten, Liam.
- Norris, David.
- Ross, Shane P.N.
Tellers: Tá, Senators Farrell and Hussey: Níl, Senators Doyle and Norris.
Question declared carried.