Credit Institutions (Stabilisation) Bill 2010: Committee and Remaining Stages

Sections 1 to 3, inclusive, agreed to.
SECTION 4

I move amendment No. 1:

In page 13, paragraph (c), line 26, to delete “and restoration”.

I wish to make a general point. The debate on the Bill is due to be guillotined at 4 p.m. and there are many points I wish to make about various sections. In reply to the debate on Second Stage the Minister of State, Deputy Mansergh, stated there were not many other examples of such legislation in other European countries. I have two papers, one prepared by the UK Treasury and the other by the IMF, which give examples of such legislation elsewhere and the difficulties encountered. These examples are driving the amendments we have proposed.

This amendment refers to section 4(c). I can understand the reason the Minister wants to include this section in looking to reorganise and even preserve the financial position of Anglo Irish Bank because its further deterioration would cause even more collateral damage to the country. However, I cannot understand how restoring the financial position of Anglo Irish Bank can be a purpose of the Bill, given the colossal damage the bank has done to the economy and the country.

With regard to the phrase "and restoration of" in section 4(c) which Senator Donohoe wishes to have deleted, the purpose of the legislation is to try to ensure a High Court order under the Bill will be recognised as a reorganisation measure under the terms of the relevant European Union legal instrument. Therefore, orders should be expressed as being made with the intention of preserving or restoring a credit institution. The Bill follows the language used in the relevant European Union directive. This does not bind the Minister to any future course of action.

One of the reasons for the speedy enactment of the legislation is to bring about a speedy resolution of the issues that have arisen in Anglo Irish Bank Corporation and Irish Nationwide Building Society. The legislation will facilitate the merger of these institutions, together with the disposal of certain of their liabilities and the preservation of the entity solely for the purpose of working out the assets over time.

Is it really necessary to include the phrase "and restoration"? What is the Minister seeking to restore?

I am advised that the object is the restoration of the financial position of the institution, not the institution itself. We would all like to see the financial position of the banks restored in that sense. This is a legal issue. I am advised that it is prudent, if we wish to have these orders recognised in other European countries, to have exact correspondence between the phrase used in the Bill and that used in the European Union legal instrument. That is the net issue. It does not give me particular pleasure to have to explain to those who want to mislead on this issue — I do not suggest Senator Donohoe is one of them — that the phrase "and restoration" is used because there might be an implication which would be at variance with the Government's policy which clearly is that the assets of these institutions should be worked out as quickly as possible.

Senator Donohoe spoke about collateral damage and in reply the Minister spoke about legal advice received. The gnáth duine, the ordinary person, does not trust the Minister's legal advice, primarily because he has been wrong at every hand's turn, despite his earlier protestations and those of the Minister of State, Deputy Mansergh. If the Minister wants to be fair about this, we have got it wrong about the banks every step of the way.

The Minister has. If he forgets his commentators and advisers and speaks to ordinary people in Dublin West or Cork South Central, he will learn they have no confidence in the Department of Finance, the Government or the banks and bankers. They are absolutely petrified. I am not a rocket scientist, but I understand the Minister's initial comment, way back when all of this began, was that it was the cheapest bailout in the history of the State and money well spent.

No, but I will reply in one minute.

The Minister can and I will come back to it again. Who is now dictating to us? Is it the European Union, the IMF, the European Central Bank, Mr. Elderfield, the Attorney General or the mandarins in the Department? Looking at the rest of the section, we have not protected the interests of the ordinary person. We can have a debate about bondholders and other sectors, but we all accept that there is a compelling need to have a proper banking system.

On Monday I went to the Bank of Ireland branch in Wilton. The tellers have been distraught at times at the abuse they receive. This is because of the failure of the Government to protect the interests of the people. The Minister can respond but the reality is we have not done it. He saw the run on money. People vote with their feet. Ordinary people do not have confidence because he is not explaining the matter properly to them. They do not believe Anglo Irish Bank is central to the reorganisation of the banking system. He has not convinced me of the need to retain that bank.

I know where to start. When Sweden had a banking crisis, the parties there agreed to resolve it together. We never achieved that measure of agreement.

We supported the Government on the first night.

We initially achieved agreement on the guarantee.

Let us be fair, we supported the guarantee.

Please allow the Minister to speak without interruption.

I listened to the Senator and I am entitled to reply. The agreement on the guarantee was welcome but thereafter we decided to quarrel and turn it into a political football. The Senator's party specifically decided to raise the issue of dishonouring senior debt. I will be clear about this matter. If one decides to torch that house, the house next door is called "deposits". One should not be surprised that a large quantity of deposits have left the Irish banking system in the past two years. For some time now, there has been a large amount of irresponsible commentary both inside and outside the Houses in regard to banking issues. I agree that confidence has to be restored to the sector but that requires us to pull together, which we have not done in the past two years. All of us should examine our consciences in that regard.

The Senator raised a political charge I dealt with previously in the media. I never used the words "the cheapest bailout". I was interviewed on my way into a conference in Dublin several months after the guarantee was introduced and at a time when the United Kingdom Government was investing substantial sums of money in its own banks. I simply stated that it had been the cheapest bailout so far. The Senator can check the record of my comments. It was a cheap bailout at that stage. On the night of the guarantee, I indicated that we would have to go very deep into the banking system.

The Senator also raised the question of Anglo Irish Bank and the political charge that somehow the Government or I have particular affection for that bank and want to preserve it. That is certainly not the case but the collapse of the bank would have collapsed the country's economy. That prospect is not understood or accepted by some who have consistently argued against it even though Professor Honohan's report on the guarantee specifically stated that Anglo Irish Bank was of systemic importance. It was not systemically important in the sense that it has branches in every part of Ireland, like AIB, but because it was of such a large size that its failure would have huge implications for Ireland, the sovereign and the other banks in the financial system.

I have endlessly rehearsed these arguments in the past two years but certain Opposition politicians, including Senator Buttimer, simply want to repeat the same old charges. The Senator is not particularly bad in this regard but that has been the character and quality of the debate on this subject. If he is in government, he will get a wake up call very quickly. If I am a Member, my party will support Government policy and ensure they are restored. We have to be more responsible on this issue than we have been heretofore.

A national debate on default continues to take place in the media despite the fact that every schoolchild knows that one cannot stage a default without the support of a central bank. When certain bonds are dishonoured in the United States, the Federal Reserve immediately moves in to protect the institution in question. The European Central Bank made it clear to us in the recent negotiations that it would not countenance a default on senior debt. That is the position of our Central Bank. The response is that the ECB is being unfair in refusing us this easy way out but it has already loaned more than €100 billion to the Irish banking system at a rate of 1% rather than 5.8%. Our banking system has become highly dependent on that collateral but it cannot continue indefinitely. We have to take structural measures to reform the banks.

I apologise to the Senator if I seem somewhat vigorous in replying to him but he personified many of the arguments we have heard in the past two years. These arguments have not brought us anywhere on this subject and that is why I responded vigorously.

In regard to amendment No. 1, I have already explained that we are following the wording of a Community law directive because that ensures recognition by other European countries of court orders made under this legislation. That is important because many of our banking instruments are expressed in the law of other European countries. The more international recognition we can obtain for our court orders, the stronger and more virile these orders become. That definitively does not mean this Government is committed to restoring Anglo Irish Bank.

The Government is free to do as it pleases in this matter. I have already outlined our policy but I will do so again for the House. It is intended to use the powers in relation to assets and liabilities to deal with the bank's assets and liabilities. It is also intended to merge Anglo Irish Bank and Irish Nationwide Building Society into a single entity and to work out their assets over time. That is clear.

As a disinterested observer, I voted for the guarantee scheme. Knowing what we know now, I would still support the legislation if I had to vote for it again because it was the correct and only decision available to us. However, the Minister is not completely blameless in this nor is the main Opposition party completely to blame. Very responsibly, Fine Gael supported the guarantee legislation.

The Labour Party keeps reminding us that it never supported the legislation. Every time it reminds the Minister of that fact, he responds with the speech he just made to Senator Buttimer. That is the wrong response. The correct response is Professor Honohan's report, which explicitly states that without the guarantee there would have been a run on all the high street banks and the banking sector would have collapsed.

I stand corrected.

The reason he does not refer to the report is because Professor Honohan went on to suggest that the guarantee was perhaps too extensive. As the Minister does not want to acknowledge that finding, he sticks to the other argument.

Without being patronising, the jury is out on what would have happened to senior bondholders. I concur with the Minister's thesis because I am not comfortable with the idea of burning the bondholders but that should be his answer. Fine Gael was clear in its support for the guarantee and Professor Honohan was explicit on the need for one. The Minister's constituency colleague should be told that the argument has already been concluded every time she raises it. We rely on Professor Honohan for disinterested opinion in this area. The Minister can argue his case on the other issue because nobody knows what would have happened.

I understand why my colleagues tabled amendment No. 1. Can the Minister imagine telling the Irish people that the Oireachtas passed legislation to restore Anglo Irish Bank? The people will walk towards Senator Donohoe on that issue.

I hope they are listening.

I want those words to be removed because I do not want to be associated with restoring Anglo Irish Bank. I am aware that the section deals with the financial position rather than the bank but words mean what people think they mean. Getting rid of those words will not damage the Minister's intentions.

Accepting the amendment would not undermine the Minister's objectives. This was a belt and braces bit added in at the end by the Parliamentary Counsel. It is unnecessary and is tautologous. The Minister could concede the point to Senator Donohoe or, at the very least, concede that his argument prevails but that he is not prepared to accept it, because at least that would be practical. Senator Donohoe was right in what he said.

I share Senator O'Toole's dislike of having the phrase in the legislation but I never sit here as a lawyer. I sit here as a Minister and take the legal advice I am given in a matter like this. I welcome the fact the amendment was tabled and discussed because it gave me, as Minister, an opportunity to outline that this was not the policy in regard to Anglo Irish Bank.

Amendment, by leave, withdrawn.
Section 4 agreed to.
SECTION 5
Question proposed: "That section 5 stand part of the Bill."

I have raised the following question, including on the Order of Business. Does this country need a Central Bank? What we need is regulation and a Central Bank for the currency. Forget about the little Irelanders, as I describe them, who believe this is something to do with sovereignty. I am just talking about operating our currency. I presume the Minister would be instinctively in favour of euro bonds, although I am not sure whether he has offered a view on that publicly. Do we need a Central Bank? What we need is regulation and a democratic European Central Bank in Frankfurt to which we can send a curate every month. Do we need a Central Bank, apart from the optics of being able to deal with those europhobes? Do we need 16 central banks to run the one currency?

Senator O'Toole has raised a very large question which would probably necessitate a full amendment to the European Union treaties. Every member state which participates in the euro has representation on the governing council of the European Central Bank through their governors. That is of considerable value to Ireland and other countries. When we linked ourselves to sterling, we had no influence with the Bank of England, although our link with sterling was only an alignment, not a currency union, whereas under this arrangement we have a voice within the European Central Bank. It may have been a voice spoken loudly to in recent times but it is still a voice. Likewise, the eurozone finance Ministers meet in the euro group and have access to the President of the European Central Bank in that way, which again is of value to the country.

The wider question, which the Senator raised and which is a valid one, is whether the European Central Bank should be free of all political direction. The statute establishing the European Central Bank entrenches its independence of the political system, yet questions relating to currency, valuation and the regulation of banking are all highly political questions. As the Senator knows, different countries have different arrangements. For example, in the United States, the mandate of the Federal Reserve is far more extensive than simply managing a currency and ensuring there is no inflation. It extends to social and economic objectives. There are different arrangements in different currency areas.

A national central bank has become a branch office for the ECB in each member state. Essentially, that is the direction in which we have moved. If one takes the bank support measures which are in place and the facilities being provided by the European Central Bank, the facilities described as collateral depend on the giving of security to the European Central Bank. The relevant collateral is provided for the local institution directly from the European Central Bank. If one looks at the emergency liquidity arrangements which apply when, essentially, the institution needs cash and does not have any further collateral to offer, that is done by the national central bank, although the currency is euro. There is a sort of mystery in that arrangement but the risk is on the sovereign in regard to such lending to the institutions. There is merit in Senator O'Toole's point but there is a need for a wider debate in Europe not only about euro bonds but about the role of the Central Bank in the current crisis.

I thank the Minister for his response. I read something recently about whether a central bank can go bust. It is a question which goes to the heart of the point the Minister just made. Since we left the gold standard, central banks cannot go bust. Quantitative easing is the proof of this. There is a row in the United States currently. They will print $600 billion extra and buy bonds from each other. The role of the Central Bank has changed completely. Tier one is not even decided in the European Union but in Switzerland. Is that not an extraordinary issue?

The reason I raise this issue is that throughout this legislation, the Minister has given himself all manner of fail-safes, rights and so on. However, this section states that we cannot interfere with the European Central Bank. That proves my point. We can walk over Stock Exchange rules, pay short shrift to the Companies Acts, deal with any of the by-laws or rules of any organisation or association and we can walk over the 1989 building societies legislation and the Central Bank legislation, as required by the Minister. I do not disagree with the objectives but I say that to prove a point.

This section states that nothing in the Bill prevents the performance of the Governor of the Central Bank in his or her functions in regard to obligations to Europe. It is on that basis that I asked the question. I recognise it is peripheral to this but it is important people realise we are passing legislation which allows us to ride roughshod over the Constitution.

The Long Title refers to disturbance, permanent and otherwise, of rights, including property rights. We will come back to it. We are giving our permission to steamroll through 200 years of legislation. I am not saying I oppose this. I have problems with the way it is done in a number of places, but this section is different. We are saying we will not touch the man in Dame Street and that is why I asked the question.

Question put and agreed to.
SECTION 6
Question proposed: "That section 6 stand part of the Bill."

In a way I wish to pick up on what Senator O'Toole said about the independence of the Central Bank from any explicit political guidance. Will the Minister explain further what this section means? The phrase "may from time to time specify a relationship framework in writing to govern the relationship between the Minister and Governor" is ripe for abuse in the future. Section 7(2) states: "the Minister, having consulted with the Governor". That is made clear throughout the Bill. This subsection, however, appears to give the Minister the ability to issue some form of written guidance to the Central Bank and the person occupying the role of Governor. It is difficult to see how the ability to issue that kind of a guidance is consistent with what section 5 is about, namely, to seek to maintain the independence of the Central Bank.

I listened with interest to the interview the Minister gave on "Morning Ireland" during the week. He spoke about the review of the Department of Finance and what was learned. He referred to the economic unsustainability of the political guidance that was given to Departments and to the entire system. Given that those kinds of mistakes were made in the past, is there not a real danger that a mistake like that could be made by allowing section 6 to stand?

A relationship needs to have two parties to it and whatever agreement is drawn up or whatever is specified by the Minister, clearly the written relationship framework would be concluded after consultation with the Governor. The relationship framework fully respects the independence of the Governor and there is no question of the Minister trying to direct the Governor under that section. In fact the section is placed in the Bill after the section confirming the independence of the Governor of the Central Bank. The function of the relationship agreement is simply to provide that when the Central Bank is giving the advice to the Department it is done in a structured and consistent way.

An important and valid issue raised in the discussion is why all the powers are not simply being given to the Governor of the Central Bank in the first instance. That was reflected upon in the preparation of the legislation. However, the view was taken that given the scale of the emergency and the scale of funds that would be required to be deployed to address that emergency, the Minister for Finance of the day, as the person accountable to Dáil Éireann for public moneys, should exercise these powers. The Senator will have noticed from the programme that it is intended to establish permanent resolution legislation for banks and the intention is to publish such legislation by the end of February. That permanent resolution legislation will have the Governor of the Central Bank as the central person exercising powers under that legislation. If one likes, that is foreshadowed in this legislation and as the Senator rightly points out many sections can only be operated and implemented after consultation with the Governor, but also a wider relationship should be established so the Governor's functions regarding advice are clarified in different ways.

Is much of that guidance not already laid out in the Central Bank Reform Act 2010, which specifies the role of the Central Bank and other regulatory bodies in our financial and banking systems? During the debate on that Bill we discussed setting up the Central Bank Commission. The section uses the phrase "to govern the relationship between the Minister and the Governor [of the Central Bank]". In a number of years when the wisdom of this time has been forgotten, we might find ourselves in a similar situation again — I hope it never happens and if it does it is less serious. A future Minister might be dealing with a particular bank and there might be some allegation of intimacy between that bank and the party that is in government, but a decision would then be made. Does having such a section in place not create the capacity for some form of guidance or if not the capacity the perception that it will be happening?

I am mystified by a point the Minister made and want to explore it further. If the Minister knows that the permanent legislation that will follow this temporary legislation will have the Governor discharging the responsibilities outlined in the Bill, why does the temporary legislation provide that the Minister for Finance should do it?

I believe I explained that in terms of the vast amount of public money that will be invested in the institutions as a result of the programme and the need to ensure the Minister for Finance of the day will be accountable for that substantial investment to Dáil Éireann, to which he is responsible. That is the primary reason.

The relationship framework is a very important provision that will facilitate the development of an understanding between the Minister and the Governor on the exercise of the powers. It does not in any way undermine the independence of the Governor, which is guaranteed by the preceding section, and provides a valuable structure for developing and understanding the relative powers. Of course, the legislation is temporary and therefore the scenario the Senator paints of some future Minister exercising powers against the Governor will not materialise; the Bill lapses at the end of 2012.

Question put and agreed to.
SECTION 7

I move amendment No. 2:

In page 15, subsection (4), lines 20 to 23, to delete all words from and including "Unless" in line 20 down to and including "exist," in line 23.

May I ask a question on the section overall before I get into the amendment?

No, we must deal with the amendment first.

The purpose of the amendment is to clarify the circumstances the Minister has in mind requiring giving written notice to the relevant institution. I apologise, I have lost my train of thought. May I have a moment to reflect? Perhaps Senator O'Toole could remind me of the purpose of my amendment.

The amendment needs to be taken in the context of the entire section. Section 7(4) appears to be contradictory to section 7(1)(a) — assuming that somebody can understand section 7(1)(a). First, I will explain my understanding of that subsection and then explain how the amendment fits into that. Section 7(1)(a) provides that “the Minister may make a proposed direction order proposing that a relevant institution be directed to take ... or refrain from taking”. The amendment seeks to delete words that seem to contradict that. Section 7(4) states “unless the relevant institution concerned consents to the making of a direction order”. However, we have already said that it needs to put up with it — put up or shut up — but we are now saying unless it disagrees. There is a clear conflict.

Certain writers have been famous for their periodic sentences, which go on for line after line making it difficult to work out what they mean. However, my reading of that section makes it clear that there is a conflict. Section 7(1)(a) also provides that the Minister may make an order notwithstanding any statutory or contractual pre-emption rights. I am reading it differently from how it is written in the Bill to try to make English of it. It is also notwithstanding the listing rules of a regulated market or the rules of any other market on which the shares of the relevant institution may be traded from time to time. Some of those might not be Irish because banks might be dealing with various kinds of issuers. Are we just talking about Irish-based issuers on the Irish Stock Exchange? Irish bank shares are also listed on the London Stock Exchange. Is the Minister asking us to agree that he can make an order notwithstanding any of listing rules of the market regulated by the London Stock Exchange? If so, I have a problem with it. However, this seems to be contradicted elsewhere in the section.

Section 7(1)(b) refers to de-listing, with which I do not have a problem. However, I do not understand what "another multilateral trading facility" means. Is this over-the-counter share trading or what? If it is OTC type trading, is it like National Toll Roads, for instance, which is not listed but in whose shares one can deal? Is it that kind of system where one deals directly with stock brokers without them being listed in a company, or what is the issue with those?

On another point, under subsection (1)(d), the Minister can then make an order “making a specified alteration to the relevant institution’s memorandum of association and articles of association”. We are passing legislation that undermines entire Acts. Maybe that is the case. Is the Minister sure he has dotted all the i’s and crossed all the t’s?

The paragraph goes on to state "(including, without prejudice to the generality of the foregoing,". Is there somebody who can tell me what that means? I do not know what "foregoing" we are talking about. Is it the foregoing of the paragraph, the subsection, the section or the Bill?

Which subsection?

I will listen to the Minister on it. I am just confused. It states, "without prejudice to the generality of the foregoing." If the Minister can bring me to an understanding of it, then the next clause in it is, "the alteration of the rights of shareholders".

Is the Senator moving away from the amendment?

No. The Minister is giving power to do all of these things and this amendment seems to be supporting that, in other words, by taking a catch-all clause out of it to undermine the Minister's powers after the Minister had given himself all of these powers. The Bill provides, "(including, without prejudice to the generality of the foregoing", the Minister can make a specified alteration, including an alternation of the rights of shareholders. Can the Minister do this?

The Companies Act 1990 is one of the Acts mentioned. I have not bothered to go back to look at it. I would not be able to find it in that Act, it is such a big one. The Minister is asking us to do things here with which I am deeply uncomfortable, even though I see his objective. Can we, in fact, pass this?

If the Minister's answer to all of those questions is "yes", can he then explain why he cannot accept Senator Donohoe's amendment because it seems to give the Minister that power, or else it is reflecting in his mind a doubt that he can really do all that he stated earlier?

I hope I make some sense to the Minister on this. It is quite difficult to read some of the sentences in the section.

Senator O'Toole raises an interesting point. Is it allowable to in a sense ride roughshod over other rights and entitlements in company law and to subjugate their authority to this one here? It is something we raised on Second Stage about the constitutionality of the Bill. I raise it because I sympathise with the point the Senator raises about how the Minister is compromising the rights, entitlements or provisions within company law.

I thank Senator O'Toole for stepping in. I emphasise one point he made. On subsection (1)(a), which states “notwithstanding any statutory or contractual pre-emption rights, the listing rules of a regulated market”, does the Minister mean a stock exchange?

I understand this legislation to state that notwithstanding the rules of the Stock Exchange, the Government will be able to step in to make rules and decisions on the presence of a company on the Stock Exchange. I thought that kind of relationship was one that very much occurred only between the listing company and where it is listing, in this case the Stock Exchange. It merely indicates to me the real tension that is at play here. What we are trying to do is manage the impact that a systemic bank can have on the rest of the economy but there is a real tension between that and the rights of private property, and the rights of the same bank then to be present, for example, on the Stock Exchange. To compound what Senator O'Malley stated, is the Minister stating that this legislation would be able to override the rules of, for example, the Irish Stock Exchange and override the nature of a relationship a bank might have with the agency on which it is listed?

It is important to remember the context in which this power is being sought. The power is being sought because there are circumstances in the Irish banking system which are threats to the stability of the system and one of the threats to the stability of the system is that a particular institution might not be able to access any risk capital on the markets. In such circumstances the Minister, in order to preserve the financial stability of the system, must be in a position to be the provider of risk capital of last resort and to be in that position the Minister must be in a position to overrule existing veto powers enjoyed by shareholders. Were the Minister not given that power, the shareholders could reject a proposed investment and that would prevent the stabilisation of the institution concerned.

Clearly, any powers being exercised under this section would be proportionate to the object to be achieved. Were a bank well capitalised, for example, and able to access funds on the market in a credible way, it would not be possible for the State to exercise these powers to overrule the interests of shareholders. One is talking here about an extraordinary contingency which might or might not materialise, and equipping the Minister with powers to deal with it.

Surely, by virtue of the shareholding the Minister holds now in these institutions on behalf of the State, and the moral authority apart from that, none of those institutions would dare overrule him or even if they did, would not be able to overrule him in the proper exercise of the powers he possesses.

Senator Coghlan has given a good example. Although I have a substantial shareholding, for example, in Bank of Ireland or AIB, the fact remains that there are questions about the exercise of those voting rights in a context where I am making a further investment in terms of the Stock Exchange procedures and rules that apply to takeovers etc. I say to Senator O'Toole, that is the purpose of the exclusion of legislation. There must be clarity about this particular power.

One of the crucial points made by the European Commission, and by the ECB and the IMF in their discussions, and one in which I personally participated in the particular discussion, was the need for speed of execution in these banking matters. We cannot simply state that we will capitalise bank X to the extent of, say, €4 billion and in two months time there will be a shareholders meeting about this. Given the perilous condition of the Irish banking system, that is not credible on the markets. We need a speed of execution here and that is why this section empowers the Minister for Finance simply to put money into the institution notwithstanding the various stock exchange rules, the Companies Act rules or the provisions of memoranda or articles of association.

A power of this type must be exercised subject to the terms of this statute and subject to the terms of the Constitution. Of course, judicial confirmation is required of the exercise of the power. Even apart from that, it is always subject to the Constitution and it must always be exercised, like all powers, in a manner which is proportionate to the need to secure the objectives of the statute. It is not a power that can be used at large or willfully against financial institutions that are thriving. It is a power that can be used where an institution is exposed in its capital base, and the Minister can then make a variety of direction orders in these circumstances to give complete satisfaction that this matter can be dealt with expeditiously.

I want to be clear about one point, I am not querying the objective or the purposes of the Bill. The query is a purely legislative one. I am not arguing the case for what the Minister is trying to achieve. I am merely raising questions on the method in which the Minister is doing it. The questions that come up for me are the ones that I raised. AIB, for example, is currently listed on the London Stock Exchange and I presume the issuer referred to by the Minister is the bank. As long as it is listed it is required to conform to the rules of the Stock Exchange and must sign off on them. The Minister is stating that this applies "notwithstanding anything in those rules". That is an issue as I cannot see how the Minister has the authority for this. I am not objecting to the Minister having that authority but I do not know that he could have it.

The next issue may have a very simple answer. What is a multilateral trading facility? The Minister raised the question of shareholders. I cannot recall the term in a building society but I believe such people are called members as opposed to shareholders. Does this issue extend to them? I will hold my questions on the Minister's points regarding shareholders until we get to section 20. I see the Minister looking at the clock but we will get to that section all right. Will the Minister deal with those issues? The amendment simply considers that if these powers are vested in the Minister, there is no need to include the undermining position in subsection (4).

I appreciate the Minister's point on clarity in law. Would he not aid the speed of execution if he could ensure the non-continuance in office of any remaining so-called legacy directors? I take his point about Stock Exchange rules and people who could put cows on the line. We may not be playing the cleverest game on behalf of the State with the continuance of certain people in office in some of these institutions.

There has been a substantial amount of change and scope for further change under this legislation when it is fully implemented in the next few weeks. A multilateral trading facility is a secondary market rather than an official market.

It is a grey market in other words.

Yes. Senator O'Toole also raised the question of de-listing. There comes a point under the terms of the rules themselves where the degree of State investment and participation would result in the entity being de-listed.

It is in that context the institution would be required to de-list. The State has no ambition to have banks automatically de-listed from the Stock Exchange but if the terms of the exchange require it to be de-listed, it is necessary for the Minister to be able to require the bank to do it.

I have a question on section 7(1)(a). It indicates “rules of any other market on which the shares of the relevant institution may be traded from time to time” but does that include Senator O’Toole’s example of AIB shares on the British Stock Exchange?

This legislation will give the Government the power not only to override the rules of the Irish Stock Exchange but also any other stock exchange where an Irish company is traded.

Yes, and that is crucial. There was an entertaining exchange earlier about the relevant community legal provisions. That is why we have sought to mirror those provisions in so far as possible in this legislation. By mirroring the provisions in this legislation, we are ensuring a degree of international recognition for the High Court orders to be made under it.

The Minister can correct me if I am wrong but is the following the procedure as outlined? There may be equity going from the bank to the Minister in lieu of whatever is being given to the bank. That is the consideration. When the bank and the Minister make that decision and the transaction does not comply with the listing rules of the London Stock Exchange, for example, section 7(1)(b) would then come into effect and a de-listing would be applied for. Is that the process?

I can understand that, although it is cumbersome.

Amendment, by leave, withdrawn.
Question proposed: "That section 7 stand part of the Bill."

There are two other points relating to section 7, with the first being section 7(5)(c), which states: “the Minister has reasonable grounds for believing that confidentiality with regard to the proposed direction order, or the possibility of the making of a direction order, would not be maintained and that the breach of such confidentiality would have significant adverse consequences”. What experience have we had to this point which has made the Minister deem it necessary to refer specifically to confidentiality? To be clear, this seems to be the confidentiality between the Minister and the financial institution.

The second point relates to section 7(1)(d) which states: “making a specified alteration to the relevant institution’s memorandum of association and articles of association (including, without prejudice to the generality of the foregoing, the alteration of the rights of shareholders or any class of shareholders)”. This is to emphasise the import of what this legislation involves. I understand the point that this legislation is to be wielded by the Government in exceptional financial circumstances. I hope we have this right because when the Government looks to wield this power, it should be able to do so. This section and others should not end up leaving the entire process snared in a legal challenge.

On Second Stage I made the point that when equivalent legislation was triggered in other jurisdictions, it led to immediate legal challenges. With the broadness of the conferred power, it appears inevitable that legal challenges will be taken, although I hope they are not.

My questions relate to confidentiality but also emphasise the point relating to section 7(1)(d). I do not want someone to look back at the debate on this legislation in years to come, as brief as it will be given that we are discussing historic legislation, and for it to be said that this matter was not debated or picked out as something that could be challenged at some future point.

I welcome Senators' interventions on the Bill. I should not comment on the other House but there was no such similar debate there. On confidentiality, the Minister would not notify the institution but would go straight to court for confirmation of the order. The purpose of the confidentiality subsection comes from the possibility of the Minister making an assessment that confidentiality will be broken, primarily within the institution itself, in order that he or she can move directly to court to deal with the matter. As we know from what happened in some of our financial institutions in recent years, we can see the wisdom of having a power of this type.

I had personal direct experience of negotiations with the former chief executive of Anglo Irish Bank shortly before the bank was offered capitalisation and ultimately nationalised. With such discussions, could we be certain there would not be media disclosures? There are circumstances where the system and its stability must be protected in the context of the institution being dealt with.

The Senator correctly raised another query relating to section 7(1)(d), which relates to the question of the rights of shareholders, classes of shareholders and the alteration of their rights. The Senator is quite right. If a valuable shareholding was interfered with, there could be questions of legal entitlement, which is a consideration of proportionality to which the Minister must have regard in implementing this legislation. On the other hand, if one has an institution which requires so much capital and cannot access it on the market and which has a residual shareholder class, plainly that residual shareholder class has assets of very low value, if any.

Question put and agreed to.
Sections 8 and 9 agreed to.
SECTION 10
Question proposed: "That section 10 stand part of the Bill."

What urgent circumstances would result in the section being triggered?

The provision relates to the variation of an initial or primary order. If there is a technical flaw in the order which requires urgent amendment, the Minister may apply to the courtex parte and without notice. The purpose of the section is to allow the Minister to apply to the court to alter a direction order if he or she is satisfied that the alteration is necessary to achieve the purposes of the Bill. It is to be expected that in an urgent application for a direction order matters may arise at a later time which require to be addressed. While the Minister will apply ex parte, the court may take the view, on hearing the matter, that a party should be put on notice. Therefore, the fact that the Minister may apply ex parte does not prevent the court from deciding that a party should be put on notice of the Minister’s application.

In that case, is it not a requirement that the Minister's application to the court be made on technical grounds? Could this provision be triggered by a change in broader circumstances or as a result of new information coming to light?

The circumstances defined for anex parte application are “urgent circumstances”. If one has to apply with notice, one must give notice of the proceedings. There may be urgent circumstances where a Minister may wish to apply on his or her own motion without notice to another party. The court will then have the Minister’s application and determine whether it is of sufficient urgency to be acceded to or whether a temporary order should be made and other parties put on notice.

Question put and agreed to.
Sections 11 and 12 agreed to.
SECTION 13
Question proposed: "That section 13 stand part of the Bill."

Having read a substantial amount of commentary on the Bill and the record of the debate in the other House, it is clear that some of the powers provided for in section 13 have given rise to considerable discussion. The extraordinary innovation in the Bill is the introduction of the concept of special manager, a person who may be appointed to a bank and, on behalf of the Minister, exercise the wide-ranging powers conferred by the legislation. A special manager will have extensive powers which will influence the destiny of the financial institution to which he or she is appointed. What will be the relationship between a special manager and the Minister? Will he or she report to the Minister? How will the relationship work?

It is not envisaged that there will be an immediate exercise of the powers conferred by this section.

The State has its own effective management teams in operation in Anglo Irish Bank and Irish Nationwide Building Society. This section was being prepared for the resolution legislation. It is considered to be a power which is of considerable value. It can only be exercised in exceptional circumstances or with the consent of the relevant institution. Under section 20, the special manager takes over the management of the business and carries it on as a going concern with a view to preserving and restoring the financial position in a manner consistent with the purposes of the legislation.

In some matters the special manager can, with the consent of the Minister, overrule shareholders. He or she must provide reports and other information for the bank and the Minister. In that sense, there is a requirement to provide information. He or she must act in the best interests of the bank, of which he or she is the special manager. The section provides that while a relevant institution is under special management, the functions of the directors and, with the consent of the Minister, the powers of the general meetings may be exercisable only by the special manager. The Minister's written prior consent is required for a number of actions, including the winding up of the institution in question or the appointment of an examiner, an inspector or a receiver. There must be written notice to the Minister if a party wants to enforce security against the assets of the bank.

Section 20(3) makes it clear that the business of an institution under special management shall continue as a going concern and that no agreement, policy, transaction, bank account or obligation of the institution is avoided, cancelled, stayed or otherwise affected by reason only of the appointment of a special manager.

There has been much discussion in the House about the scope and power of public interest directors, whether they have performed well and what they were aware of at different times. The Minister states the role of the special manager will be to act in the best interests of the bank, to which he or she has been appointed. This is not what is required. The purpose of the appointment must be to have someone in a financial institution who will act in the best interests of the entire financial system and ensure the institution does not end up posing a systemic risk. It is important to emphasise this point.

The Bill proposes to establish a new role of special manager who may be called upon should a further dire emergency arise and who will have much greater powers than those of a public interest director. I understand the role of the special manager will not be to serve the interests of the financial institution, to which he or she is appointed, but to protect the national interest and try to ensure the bank does not cause difficulties for the overall financial system. We should start drawing up a panel of potential special managers because the wisdom and skill they will require appear to be somewhat lacking among those who have been performed similar roles.

I seek clarification on a comment the Minister made on the role of the special manager. Will the role be completely different from that of a board member? Will it be the responsibility of the special manager to serve the national interest rather than the institutional interest? Will the Minister confirm that is the case?

I confirm that is the case. When I stated the special manager must act in the best interests of the bank, I meant he or she must act in the best interests of the bank in the context of the legislation rather than in the context of the traditional fiduciary arrangements or Stock Exchange character of the bank. This is made clear by section 20(1) which states: "The special manager of a relevant institution shall take over the management of the business of the relevant institution and shall carry on that business as a going concern with a view to preserving and restoring the financial position of the relevant institution, or the whole or any part of its business, in a manner consistent with the achievement of the purposes of this Act". The purposes of the Bill include the various considerations of the public interest referred to by Senator Donohoe.

Question put and agreed to.
Sections 14 and 15 agreed to.
SECTION 16
Question proposed: "That section 16 stand part of the Bill."

I understand this section concerns an institution which has been nominated to receive a special manager because of the threat it poses to the rest of the system. It also concerns the ability of the institution to challenge that it needs such a special manager. In this regard, the section includes the words, "not later than five working days after the making of the special management order". The Minister made the point very well that in responding to preserve the stability of the banking system time is of the essence. Given this, should the period in question not be much shorter than a full working week? If an institution seeks to challenge the decision of the Government, it should be compelled to do so almost instantly to eliminate any uncertainty in the eyes of the market and of those looking at the country.

Can a special manager be compelled to attend meetings of Oireachtas committees?

As far as I am aware, a special manager cannot be compelled to attend before an Oireachtas committee. Perhaps Senator Donohoe will refresh my mind on the section in question.

Why is a period of five working days allowed instead of one?

My understanding is that, in order to comply with the requirements of natural justice, a reasonable period must be given to a person who wishes to raise an objection to the course of action to be followed. There is a balance to be struck in terms of the time allowed. Ideally, the time allowed would be 24 hours, but, in order to afford an opportunity to a person affected by the order, a reasonable period must be given.

Question put and agreed to.
SECTION 17
Question proposed: "That section 17 stand part of the Bill."

Why does the Bill declare a period of six months from the making of a relevant special management order? I understand this to mean the period a special manager will be in place. What is the thinking behind this provision? I would have thought that, given the role such a person would have, it would make sense to leave him or her in place for a longer period to send a signal to the culture he or she would be called upon to manage.

As I understand the position, the initial period is six months, but it can be extended under the section.

Question put and agreed to.
Sections 18 and 19 agreed to.
SECTION 20
Question proposed: "That section 20 stand part of the Bill."

I was stumped when the Minister was compelled to make reference to the principles of natural justice. Natural justice still applies——

That is nice to know.

Adam and Eve received a hearing from the Almighty before they were expelled from the Garden of Eden. It is very difficult, therefore, to eliminate the concept of natural justice.

Perhaps it is just me, but section 20 is a step too far and I cannot take it. There is just too much involved. In the first place, I see the function of the special manager as that of an examiner or a person appointed to run the business for a period. I wrote a letter to the Minister this week, although he will not have seen my name on it. My name was not on the bottom, but the letter came from a board of which I am a member and was an excellent one of its type. Let me paraphrase it: "Dear Minister, we have certain information, to which we believe your bank crisis investigator doctor should have access, but, unfortunately, under section 21 of the Companies Act 2003, we find it impossible to give you this information". That letter was sent from the board to the Minister within the past week.

I refer to section 20(8) which reads, "The special manager of a relevant institution shall provide such reports and other information to the Bank and the Minister as the Bank or the Minister requests, notwithstanding any other enactment or any rule of law, code of practice, agreement, duty or obligation to any person". The Data Commissioner will have a word to say about this, given that he runs riot over us on a regular basis as we try to do our day's work. I only wish this power could help to achieve some of what I want to achieve.

By law, the Central Bank is specifically prevented from sharing information. After the offshore banking problem in 2000, whether certain people had information became an issue. In 2002 I chaired the audit review group on behalf of the Government. We found that, although Revenue, the Central Bank and perhaps another institution might have had information, they could not have shared it with one another. We brought forward legislation that referred to constricted circumstances where there might be a conduit, in a fair, open and practical way, between these institutions. I do not believe the two lines I read will overturn this provision and I would be appalled if they did. Therefore, the Minister will have to find another way to do it.

On the same issue, subsection (6) reads, "A special manager may, with the consent of the Minister and the Governor, substitute his or her own decision for any decision that would otherwise be made by the shareholders, and if he or she does so, the decision shall be taken to be the decision of the shareholders". That leaves us inAlice in Wonderland territory where words mean what I say they mean. The Minister cannot do this. Let me provide an example from company law. It deals with the issues that create a problem for shareholders. The Minister has made speeches about company law, the operation of companies and the cold question of auditors. He knows we have been looking at the position of company auditors. The requirement concerning the appointment of a company auditor is so embedded in terms of the rights of shareholders that I cannot believe the two lines I read can make a difference. This brings us back to our earlier discussion on section 7(1)(d) during which I stated I would revert to an aspect of the matter. This is it. I put it to the Minister that these two lines cannot possibly deal with the issue. In regard to AGM reports, there are various requirements under company law for decisions to be taken by the shareholders. There is a way around this in the case of the banks. As the Minister is, effectively, the shareholder, I do not know why we have even to discuss this matter. However, there are other institutions in which he does not have an equity stake as such.

In spite of its bad report in recent days, there is one thing the Minister's Department is very good at, namely, finding a new word for something. The word "examinership" is an example. When we deal with an insurance company, we do not speak about examinership but something else — a word I cannot recall. For example, the Quinn insurance group is not in examinership. The Department of Finance is superb at finding a new word to describe something. The Minister is also very good at this — we had the word "supervening" from him during the week. However, he will have to be a little more creative——

A supervening event.

I know what the Minister is trying to do, but this is not the way to do it. There are other ways to do so. If a case was taken to the Four Courts, the Minister might state his case and rely on the public interest, as mentioned in the Preamble or whatever precedes the Bill proper, but I do not believe that would hold sway or be what was required. The Minister used the word "proportional" twice. This is not proportional and flies in the face of legislation. If the whole Bill were time bound — Senator Donohoe referred to aspects that are time bound — I probably could not have this argument and I would have to admit it only pertains to certain institutions for a short period. However, it is not for a short period. Given the number of references to the word "whereas", it could apply until judgment day. While I have problems with a number of sections, it would be irresponsible of me not to vote against sections 6 and 8 in particular. They are wrong.

I want to add to that and draw attention to section 4, which gives the special manager "sole authority over and direction of all officers and employees of the relevant institution". This means anybody working in the financial institution would be bound to obey the direction of the special manager in any area. Will the Minister clarify this? If the special manager asks an employee to carry out a particular task, legally that implies he will have to agree to doing so. I state this to emphasise the power being confined in the special manager.

I wholeheartedly agree with the point made by Senator O'Toole on section 6. What does it add to the Bill? Is the provision not just creating the near certainty that, if the Bill is triggered, a shareholder will contend the manager does not speak for him and that he disagrees with the direction the Government is taking? We have seen elsewhere that shareholders are sometimes willing to fight and do fight against governments when they implement measures that are necessary to preserve the overall stability of the system. How can we say the special manager's decision will be taken to be the decision of the shareholders given that we know many shareholders will be resisting some of the measures in the Bill? It will not be in keeping with what will be happening in the real world if this Bill is ever implemented. Is stating the decision of the special manager will equate to the decision of the shareholders not just a time-bomb that will undermine the implementation of the legislation if it is called upon?

A number of points were raised. Senators O'Toole and Donohoe referred to shareholders. Decisions on the shareholders can be taken by the manager. That is part of the European framework that is being developed in this area.

With regard to confidentiality, one must consider the relevant section in conjunction with section 72 which, in turn, refers to the Schedule. In this regard, the Central Bank is legally able to share confidential information to facilitate itself, the Governor, the Minister, the head of financial regulation or a special manager. It is essential——

On a point of order, I am not arguing with the Minister. On foot of its investigation in 2001, the Committee of Public Accounts reported that issues of which the Central Bank was aware could not be communicated to other authorities. That was after the passage of the Central Bank Act 1942, which the Minister quoted. It may be the Companies (Auditing and Accounting) Act 2003 that provided a further conduit to the banks for sharing information. I am not sure about that and should not be quoted on it. The point however, is that although legislation was in place, sharing was not possible, yet the Minister's quotation refers to the authority. That does not work.

This is a specific information gateway for financial stability purposes.

I have another question. I am deeply uncomfortable with this. I have listened to the Minister's answers and know they were given to me in good faith but I believe he is being overly influenced by his objectives, with which I agree. However, I do not believe this legislation will work. There is no mention of directors.

I nearly had to be tied down last week when I heard the debate on the "public interest directors of a bank". I believed the Minister would lecture the odd person and state there is no such animal as a public interest director. All directors of a company have the same responsibilities and duties. If it is the duty of a public interest director to do something, it is also the duty of the other directors to do so. The fact that one is appointed in the public interest is neither here nor there when one takes office. Many of us are appointed to or proposed for roles on anex officio basis but when one takes up office one must act with the good of the institution in mind. If I were a director of an institution and a special manager were appointed who did all the tasks outlined and I believed his doing so were wrong, for 24 reasons I would outline, what could I do? There are certain requirements in the companies Acts on director compliance but, unfortunately, they have never been commenced by the Department of Enterprise, Trade and Innovation. What is correct for a director to do in the circumstances I describe? In what manner have we allowed for dealing with directors’ responsibility? A full section of the 2003 Act deals with the requirements and responsibilities of a director.

The Minister did not answer my specific question and I want an answer. I asked what the relationship would be between the special manager and an employee of one of these financial institutions. For example, it could be the director, the chief executive officer or chief operations officer of the bank. My understanding is that this Bill will give the special manager the ability to order any employee of the bank to do what he deems to be fit. Will the Minister answer my question in conjunction with that of Senator O'Toole?

Of course, it does. The special manager is in the same position as the employer in the institution concerned and can issue whatever direction is required.

In the light of what has been asked, I understand that when the special manager is appointed, he takes over the management of the relevant institution. Once appointed, the functions of the directors of that institution become somewhat restricted. Considering section 20, with some of the other sections, particularly sections 22, 23 and 24, I understand the special manager will determine the role of the directors. Will the Minister clarify that? What role do the directors have? Will all functions be invested in the special manager?

The special manager takes the place of the board.

Section 48 is related to the section in question and deals with the issue of public interest directors, on which Senators have had a recent discussion. Section 48 provides that "the directors of a relevant institution shall have a duty to have regard to the matters mentioned insection 4(f)”, namely, to facilitate the availability of credit in the State, to protect the State’s interest in respect of the guarantees given by the State under the Act of 2008, to protect the interests of taxpayers, to restore confidence in the banking sector, and to align the activities of the relevant institutions with the public interest and the other purposes of this Bill. Those duties will take priority over any other duty of the directors in any instance where there may be conflict. That is a very definite change. It will apply even if no special manager is appointed. The provisions of section 48 are very germane to the discussion we have just had. The position in all the guaranteed institutions will be that the directors’ duties in respect of the public interest must take priority over any other duty. If one examines the relevant provisions——

Section 22 deals with that matter.

Section 4 was questioned by Senator Donohoe in respect of the powers necessary for or incidental to the special manager's function. That is a normal power and a normal statutory provision. There is nothing unusual in it. Section 24(3) states: "A director or other officer of a relevant institution or a subsidiary of a relevant institution that is under special management remains bound to discharge his or her duties and obligations under any enactment or rule of law except to any extent that he or she is relieved of that duty or obligation by the special manager or by a provision of this Act." More generally, section 24 deals with the relationship between special managers and directors and Senator Callely drew attention to these provisions. The special manager determines what the directors can do during the special management period.

Once the special manager is appointed, does that mean the functions, role and authority of the board of directors are gone?

Yes, with the shareholders and directors.

Yes, to the extent that they are relieved of their obligations by the operation of the special manager. The special manager could opt to leave the board in place to perform certain functions. There is nothing to stop the special manager doing so.

Is it the case, if the special manager decided to leave the board in place and the board was agreeable to stay, that they would work together?

Surely that is not true. Section 22(1)(a) states that all functions that would be vested in the directors of the relevant institution will be vested in the special manager. There will be nothing left to do.

Section 24 permits the special manager to determine the role, if any, of the directors and officers in the relevant institution and its subsidiaries during the special management. He might decide that there is a very good audit committee but a very poor risk committee——

Does he take all responsibility?

——and he might decide to leave the audit committee in place.

I gather that is done with the consent of the Minister.

Is the Minister sure about that?

It is my understanding that sections 23 and 24 provides that the special manager may act with the consent of the Minister. I am sure the officials can clarify this point. The Minister can confirm this before we conclude. My understanding is that it must be done with the consent of the Minister.

That is in respect of the removal of a director, secretary or another officer. It does not concern the relationship between the special manager and the directors. This is in a separate section, section 24. Section 23 is contingent on ministerial consent; section 24 is not.

Question put and declared carried.
Section 21 agreed to.
SECTION 22
Question proposed: "That section 22 stand part of the Bill."

My question concerns section 22(2). On receivership, enforcement and claims against the financial institution, the Bill states: "Paragraphs (f), (g) and (h) of subsection (1) do not apply to the Bank, the European Central Bank or any other national central bank within the Eurosystem.” If it is necessary to say this section does not apply to other banks within the euro system, why is it not necessary to say this about the entire Bill? I am sure there is something at the start of the Bill to say this covers only institutions threatening the financial stability of the Irish system. Why is it necessary to have this reference in section 22 but not in other sections?

The relevant paragraphs, 22(1)(f), (g) and (h) deal with ministerial consent to enforcement procedures against credit institutions in the context of special management. It is not possible to give the Minister such veto powers in regard to the Central Bank, the European Central Bank or any other national central bank in the euro system. This section protects what Senator O’Toole described at the outset of the debate as——

This comes back to section 6.

——the integrity, autonomy and independence of the European Central Bank system and its associated national banks.

I thank the Minister for clarifying and I understand the point.

Does the special manager have the right to sell the institution with the consent of the Minister?

Yes, he can certainly sell the assets. I must consider whether he can sell the institution as a whole. He can certainly divest it of assets.

Have we not given him the power to sell any or all of the assets?

Yes. I am not sure whether the corporate shell can be sold.

The name of the bank is possibly the only asset. The Minister of State, Deputy Mansergh, said the part of the bank sold in Poland was probably worth more than the entire bank at one stage.

Section 22(3) gives the special manager power on a load of detailed activity that could take place in the banks, including actions concerning bank accounts and bank mandates. Section 21 states that a special manager may appoint people to help in the discharge of his or her duties. Would it not be better if the section also referred to people working for the special manager? Otherwise people will need the consent of that one person for decisions on a bank mandate or the claim or debt of an individual depositor with the bank. That appears to overload responsibility and detail on one person. Would it not be better to broaden the definition to allow people working for the special manager to make these decisions?

Section 22(3) is in place to ensure there is no interruption in the business of the bank as a going concern. This is a precautionary section that makes clear that none of the transactions referred to under section 22(3) is voided, cancelled, stayed or otherwise affected by reason only of the appointment of the special manager. When the special manager is appointed, it does not terminate one's current account or deposit account. It does not set aside a policy or a contact one has with the bank or a right, title, claim or debt in respect of the institution.

On a point of order, will the Cathaoirleach put one composite question in two minutes?

We will proceed as the business was ordered.

This is the last opportunity to speak on the Bill. I support the objective of the Minister but I do not believe the Bill will survive. I think it is unsafe and unconstitutional. In many ways, it undermines and perverts an existing body of legislation in a variety of areas. It also undermines existing regulation and undermines and perverts common law of many centuries before there was any companies legislation.

I have said in the House on a number of occasions that if no companies legislation had ever been passed, we would still be able under common law to take action against people who acted in an egregious or unacceptable manner or in a fashion that brought the country to bankruptcy. I believe that is the case and the Bill will not survive a court test. It will be challenged and found to be unconstitutional; it sets aside rights. Even though I endorse what the Minister is trying to achieve, and I see the difficulty he is in, this is rushed and we will rue the day it is passed; we will not get the result we are looking for.

As it is now 4 p.m., I am required to put the following question in accordance with the order of the Seanad of this day: "That each of the sections undisposed of is hereby agreed to, that the Schedules and the Title are hereby agreed to, that the Bill is accordingly reported to the House without amendment, that Fourth Stage is hereby completed, that the Bill is hereby received for final consideration and that the Bill is hereby passed."

Question put.
The Seanad divided: Tá, 27; Níl, 16.

  • Boyle, Dan.
  • Butler, Larry.
  • Callely, Ivor.
  • Carroll, James.
  • Carty, John.
  • Cassidy, Donie.
  • Corrigan, Maria.
  • Daly, Mark.
  • Dearey, Mark.
  • Ellis, John.
  • Feeney, Geraldine.
  • Glynn, Camillus.
  • Hanafin, John.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • MacSharry, Marc.
  • McDonald, Lisa.
  • Ó Brolcháin, Niall.
  • Ó Domhnaill, Brian.
  • Ó Murchú, Labhrás.
  • O’Brien, Francis.
  • O’Donovan, Denis.
  • O’Malley, Fiona.
  • O’Sullivan, Ned.
  • Ormonde, Ann.
  • White, Mary M.
  • Wilson, Diarmuid.

Níl

  • Bradford, Paul.
  • Burke, Paddy.
  • Buttimer, Jerry.
  • Cannon, Ciaran.
  • Coghlan, Paul.
  • Cummins, Maurice.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Healy Eames, Fidelma.
  • McCarthy, Michael.
  • McFadden, Nicky.
  • Mullen, Rónán.
  • O’Toole, Joe.
  • Phelan, John Paul.
  • Ross, Shane.
  • Ryan, Brendan.
Tellers: Tá, Senators Niall Ó Brolcháin and Diarmuid Wilson; Níl, Senators Paschal Donohoe and Joe O’Toole.
Question declared carried.

I wish to inform the House that, arising from the omission to vote Níl by Senator McCarthy, who was present in the Chamber, and arising from the inadvertent casting of a vote for the question by a Senator who had also voted in his own seat——

Double jobbing.

——the result of the division as shown on the display board has been amended with the agreement of the Tellers for both sides. The amended result will appear in the Journal of Proceedings.