Draft Commission of Investigation (Certain matters concerning transactions entered into by IBRC) Order 2015: Motion

Senator Tom Sheahan

I move:

That Seanad Éireann:

having regard to the specific matters considered by the Government to be of significant public concern regarding transactions entered into by Irish Bank Resolution Corporation, IBRC;

noting that it is the opinion of the Government that these matters of significant public concern require, as the best method of addressing the issues involved and in the public interest, examination by the establishment of a commission of investigation; and

- further noting that a draft Order proposed to be made by the Government under the Commissions of Investigation Act 2004 (No. 23 of 2004) has been duly laid before Seanad Éireann in respect of the foregoing matters referred to, together with a statement of reasons for establishing a commission under that Act;

approve the draft Commission of Investigation (Irish Bank Resolution Corporation) Order 2015, copies of which were laid before Seanad Éireann on 9th June 2015.

Minister for Finance (Deputy Michael Noonan)

I welcome the opportunity to address Senators on the Commission of Investigation (Irish Bank Resolution Corporation) Order, 2015. Following consultation with Members of the Oireachtas on Monday evening and the debate in the Dáil in the past two days, the majority of concerns raised have been addressed. I look forward to hearing the views of Senators on this significant matter of public concern and hope that in my opening statement and throughout the course of the evening I will be in a position to address the concerns of this House.

In response to significant public concern about certain transactions in IBRC, on 3 June the Government decided to establish a commission of investigation. The investigation is into certain decisions, transactions and activities entered into by Irish Banking Resolution Corporation, known as IBRC, between 21 January 2009, the date the bank was nationalised, and 7 February 2013, the date IBRC was liquidated. At yesterday's Cabinet meeting the terms of reference for the review were agreed and retired High Court judge Daniel O'Keeffe has agreed to serve as chairperson of the commission of investigation. He has a strong commercial background as a chartered accountant and former chairman of the Irish Takeover Panel. I again express my appreciation to him for agreeing to serve in this important role.

The commission of investigation will bring an end to the review of certain transactions by the special liquidators who will be directed to cease their review. While I maintain the view that the review would have been concluded competently in a prompt and efficient manner and produced a report by 30 August, the significant public concerns and the change in circumstances led to the Government's decision to establish a commission of investigation. The terms of reference for the investigation provide for the performance of a review of certain activities of IBRC and the production of a report by 31 December, in line with the Commissions of Investigation Act 2004. They also set out the scope, purpose and form of the review and report. The commission will also have the authority to report on any other matter arising from the investigation and make further recommendations as it sees fit.

The scope of the review is broad. It will consider all transactions, activities and management decisions, other than those related solely to the acquisition of assets by the National Asset Management Agency, which occurred between 21 January 2009, the date of nationalisation of IBRC, and 7 February 2013, the date of appointment of the special liquidators to IBRC, and which either resulted in, first, a capital loss to IBRC of at least €10 million during the relevant period, whether by consequence of a single transaction or a series of transactions relating to the same borrower or entities controlled by the same borrower or, second, are specifically identified by the commission as giving rise or likely to give rise to potential public concern about the ultimate returns to the taxpayer. The purpose of the two provisions is to ensure the judge is mandated to review all transactions, activities or management decisions that resulted in a capital loss of €10 million, but he will also have the power to investigate other transactions, activities or management decisions that resulted in a smaller loss but which are identified as giving rise or likely to give rise to potential public concern. This scope strikes the appropriate balance between ensuring the 30 to 40 largest transactions are reviewed while the work of the commission is not taken up examining every decision related to all small and medium enterprises, SMEs, or mortgage loans where there may not be a public concern. If Senators are aware of potential public concerns about specific transactions, they should bring them to the attention of the commission at the earliest opportunity.

Following consultation with the Opposition on Monday evening, the scope of the review was broadened and the following section was included:

In these terms of reference:

(a) "IBRC" means Irish Bank Resolution Corporation Limited;

(b) where a contractual obligation was agreed during the Relevant Period but not executed until after the Relevant Period then the contract and any resulting loss shall be regarded as having been made during the Relevant Period;

(c) references to IBRC shall be construed as including references to Anglo Irish Bank or Irish Nationwide Building Society and any subsidiaries of IBRC, Anglo Irish Bank or Irish Nationwide Building Society;

(d) for the avoidance of doubt, references to transactions, activities and management decisions shall be construed as including references to amendments made to the terms and conditions of loans.

I draw attention to point (b) in particular - where a contractual obligation, either written or verbal, was entered into prior to liquidation of IBRC but not executed until after the liquidation. The intention of this provision is to ensure no potential line of investigation into transactions, activities and managerial decisions of IBRC that, in the view of the judge, has given rise or is likely to give rise to potential public concerns will be cut off. There has been much debate in the past 24 hours about whether this provision covers verbal agreements entered into by the management of IBRC prior to the liquidation. I stated last night in the Dáil that it did and the Attorney General has confirmed that the circumstances raised in the Dáil last night by Deputy Pearse Doherty are within the scope of the terms of reference. The relevant period is focused on the areas of greatest public concern. It remains the case that the conclusion of the scope of the review at the date of liquidation is deemed necessary to focus the review on the transactions that have led to significant public concern. The commission shall investigate all transactions, activities and management decisions during the relevant period which are identified by the commission as giving rise or are likely to give rise to potential public concern. For the avoidance of doubt, amendments made to the terms and conditions of loans are included within the scope.

Questions have also been raised about the examination of unusual share trading activity in respect of any transaction under investigation. The judge is explicitly empowered to investigate such activity with its broad powers, activity which cannot be adequately investigated based on a review of files held by IBRC.

It is worth recalling that the IBRC Act 2013 contained a number of safeguards to protect the interests of the taxpayer, including independent valuation of the loan book, transparent auction processes and the prohibition on selling loan books for amounts lower than valuation. In addition, the special liquidators must meet significant legal obligations, both pursuant to the Companies Act and the IBRC Act, towards creditors generally and the State. The review shall investigate, in relation to each such decision, transaction and activity within the scope of the review: the processes, procedures and controls which were operated by IBRC in relation to the relevant write-offs to ascertain whether the appropriate internal IBRC governance procedures and controls were adhered to in respect of the transactions under review and whether the said procedures and controls were fit for purpose; whether there is prima facie evidence of material deficiencies in the performance of their functions by those acting on behalf of IBRC, including the IBRC board, directors, management, the staff of the wealth management unit and agents, in respect of transactions, activities and management decisions identified in the scope of the review; whether it can be concluded from the information available within the bank and relevant evidence and witness testimony, as appropriate, that the transactions were not commercially sound in respect of the manner in which they were conducted, the decisions made and the outcomes achieved having regard to the purposes of the Irish Bank Resolution Corporation Act 2013 set out in section 3 thereof; examine whether the interest rates or any extension to interest rates or any period for repayments were given by IBRC on preferential terms that were unduly favourable to any borrower, where those interest rates resulted in a differential of more than €4 million in interest due over the standard applicable interest rates for loans of that nature or where the amendments give rise to or are likely to give rise to potential public concerns; investigate whether, in respect of any transaction under investigation, any unusual share trading occurred which would give rise to an inference that inside information was improperly provided for or used by any person and, in the event that such an inference does arise, whether any such information was actually improperly provided or used; and, in relation to each transaction under investigation, whether the Minister for Finance or his Department was kept informed, where appropriate, in respect of the transactions concerned and whether he, or officials on his behalf, took appropriate steps in respect of the information provided for them.

While it is essential that the focus of the investigation remains on the individual transactions, it is from a review of the individual transactions that trends and potential concerns may be identified. Section 4 of the terms of reference provides the judge with the power to go further with the investigation in the public interest "on any other matters of concern arising from its investigation" and report and make recommendations on those matters.

The governance role of the Department and political oversight by both my predecessor, the late Brian Lenihan and I, as the respective Ministers for Finance during the period under investigation, was discussed during the consultation and again during the Dáil debate. I assured the Deputies who raised concerns earlier, and I wish to assure Seanad Éireann now, that under paragraph 2(f) of the terms of reference Mr. Justice O'Keeffe will be in a position to exercise judgment as to whether the Department took appropriate steps with the information provided to it on the transactions which fall under the scope.

Following consultation and engagement with the Dáil through the debate, concerns were raised regarding the wealth management unit and its specific inclusion in the terms of reference. I wish to confirm that the wealth management unit will be treated in the same manner as IBRC under the investigation. The specific inclusion of the wealth management unit in the terms of reference enables investigation into both general and specific concerns around transactions and decisions made by the wealth management unit. In addition, any reference to IBRC throughout the terms of reference shall be construed as including references to Anglo Irish Bank, Irish Nationwide and any subsidiary of IBRC, Anglo Irish Bank or Irish Nationwide. Similarly, the terms of reference have explicitly included the performance of agents of IBRC on the matters under investigation in order to enable the investigation of concerns raised regarding the role played by IBRC's advisers.

For clarity, on the issue of the threshold for the examination of whether any preferential interest rates and terms were given, the investigation is obliged to examine any situation which resulted in a differential of more than €4 million in interest due over the standard applicable interest rates, however, as outlined earlier, under the general scoping provision, the commission will also have the power to investigate any amendments made to the terms and conditions of loans transactions that give rise to potential public concern.

A final report to the Government not later than 31 December 2015, subject to section 6(6) of the Act, is envisaged. A report is to be produced in regard to the review, the purpose of which is to set out the scope and findings of the review in fulfilment of the purposes; to respect obligations of confidentiality and to respect commercial sensitivity where those are not incompatible with the public interest; and to set out such recommendations as the commission sees fit.

While the date for the final report is four months later than the date by which I had directed the special liquidators to produce their review, it is deemed appropriate bearing in mind the different nature of the review and its extended scope. A commission of investigation pursuant to the Commissions of Investigation Act 2004 will have certain enhanced powers beyond those which would be available to the special liquidators of IBRC. The most significant of these powers include the power to compel witnesses or evidence and to enter and inspect premises. The establishment of a commission of investigation will also facilitate a broader scope of inquiry and will enable the interview of witnesses and the investigation of matters such as the trading of shares, which cannot adequately be investigated based only on a review of files held by IBRC. In addition, certain criminal offences apply in respect of the making of false statements to the commission or the destruction of evidence, which would not apply in respect of the review proposed to be conducted by the special liquidators of IBRC.

During the engagement with the Dáil which commenced yesterday and was concluded this afternoon, the issue of an interim report was raised. That is now a matter for the commission, which is independent of Government in its functions. It will be a matter for the judge to determine the nature, timing or sequencing of any part of the investigation and I believe that it is essential to give the judge full flexibility in this regard. The issue of an earlier deadline was also raised by various Deputies during the debate. However, I maintain the view that a deadline of 31 December 2015 is appropriate bearing in mind the different nature of the review and its extended scope from that which was given to the special liquidators in April of this year.

The staffing requirements of the commission will reflect the scope of the terms of reference and the ambitious timescale involved. The exact requirements of the commission will become clearer once it is established and begins to scope out its work in more detail. The appointment of staff and their terms and conditions will be subject to approval by An Taoiseach, with the consent of the Minister for Public Expenditure and Reform. In addition to direct staffing costs, set-up and ongoing costs will arise from the establishment of the commission's office, ICT and administration, travel and subsistence, among other costs.

I wish to inform the Seanad, as I did the Deputies to whom I spoke during the consultation on Monday and in the Dáil last night, that this commission of investigation will be able to obtain any necessary expert advice or assistance and that the commission will be well resourced. Based on an initial assessment, a cost of €4 million is deemed a reasonable estimate for 2015 and it is proposed to provide for this from the Vote of the Department of the Taoiseach. This estimate is based on the assumption that the commission completes its work by the end of 2015, as specified in the terms of reference. If it were deemed necessary to extend the commission's work beyond that date, then further staffing and other costs will of course arise. In addition to salary and administration costs, third party costs are also likely to arise. In accordance with the provisions of the Act, following consultation with the commission and with the consent of the Minister for Public Expenditure and Reform, I will have guidelines prepared concerning this area. The extent and timing of any such costs are difficult to estimate at this stage.

Given the scale of the banking crisis and the amount of taxpayers' money involved, it is essential that the public concerns in regard to certain transactions in, and issues raised relating to, IBRC are addressed in a comprehensive manner. There is no evidence of any wrongdoing in regard to the various transactions but I recognise that there are genuine public concerns and these concerns have grown significantly in recent weeks. Therefore, I repeat what I said earlier in this statement and encourage any Senator who has information that may be a cause of public concern to bring those concerns to the attention of Mr. Justice O'Keeffe.

A well resourced commission of investigation with targeted terms of reference and an ambitious timeline is the best way now to address the public concerns. Let me be clear. The investigation must be focused on the areas of greatest public concern, and it is, but it is not my intention nor is it the intention of the Government to cut off a potential line of investigation into transactions, activities and managerial decisions of IBRC that have given rise or are likely to give rise to potential public concerns.

I thank the Senators for their attention.

Senator Darragh O'Brien

I welcome the Minister, Deputy Noonan, to the House. I thank him for his comprehensive and clear statement on the terms of reference for the commission of investigation, which is probably a week or ten days overdue.

That said, I commend the Minister on the fact that he engaged with my party leader and with others in the Opposition and endeavoured, in so far as possible, to take their concerns on board and add extra items that should have been in the terms of reference from the beginning. It is crucially important that the IBRC wealth management unit is included as well as the relationship between IBRC and the Department, dating back to the time of the Minister's predecessor, the late Brian Lenihan. Ironically, today is the fourth anniversary of Brian's passing.

My concern and the concern of my party, which has pursued this over the last number of weeks alongside Deputy Catherine Murphy, other Deputies and colleagues in Sinn Féin, is that this is what is required. The people want to get to the bottom of this. One item that is missing is a date for publication of an interim report. We will continue to pursue that, and my party will write to the judge to ask him to issue an interim report. There is no reason that Siteserv cannot be dealt with as a distinct module.

There are many other issues. I have raised concerns in the House previously about IBRC and the National Asset Management Agency, NAMA, although I will not complicate the discussion this evening by mentioning that. However, the liquidation of IBRC is something to do with this as well and setting a deadline for the closure and wind-up of NAMA can lead to fire sales and strange deals being done, because there is an end date on both. That is the reality. However, as leader of the Fianna Fáil group, I am interested first and foremost in getting the facts and ensuring that if there were problems, they are addressed. If deals have been done for people that should not have been done, we must know about that. All of this material is in the public arena, while one must not forget that there are thousands of ordinary mortgage holders and small businesses across Europe being treated abominably by this bank and others. They do not appear to have received any of the preferential treatment that it is alleged some businessmen and others received in their dealings with IBRC and, indeed, in other dealings. That is what people find so grossly unfair.

It is important that the commission of investigation be established. We support that and we support the terms of reference. As I said, we believe one element is missing and I believe the Government, even at this stage, should consider scheduling the investigation and setting a deadline for an interim report to be issued. I say this in the context of other commissions of investigation that the Government has established, particularly the Fennelly commission which should have reported already but is unlikely to report until after the general election, for very obvious reasons of which we are all aware. The Taoiseach was allowed to assign to that commission of investigation the resignation or sacking of the previous Garda Commissioner and his role in that, even though it had nothing to do with that commission of investigation. The Government's track record on commissions of investigation is not great.

The initial reaction of the Government, the Minister and the Department to the issues raised by Deputy Catherine Murphy and my party leader, Deputy Martin, Deputy Michael McGrath and others was not great initially, but that should be put aside so we can get down to the work that must be done. In the interests of transparency, once the commission is established I have no doubt that other items will be brought to the judge's attention. As a betting man I would say it is highly unlikely that this work could be finished by the end of this year and the judge will probably seek a further extension. We want the work to be completed properly.

Serious issues have been raised and serious allegations have been made that deserve investigation. I hope they are not correct; I hope the allegations are unfounded. If they are proven, very serious questions will have to be asked about both the Department's management of IBRC and how customers may have received preferential treatment. I hope that is not the case.

To conclude, I welcome that the Minister consulted widely and took other views on board. He has shown that he is able to expand the scope and take feedback on board. I wish that happened more often; it is good that it happened in this instance. Our party will support the establishment of the commission and the terms of reference before us but we will pursue separately with the judge, by way of formal correspondence, a commitment to issue an interim report. I again thank the Minister for outlining clearly and comprehensively the thought process behind the establishment of the commission. We will support it.

Senator Michael D'Arcy

It is good to be back. One of the ushers stopped me on the way in and said he did not know who I was.

Senator Darragh O'Brien

Who the Senator is in Wexford is all that matters.

Senator Michael D'Arcy

Like Senator Barrett, I must temper my comments as I am a member of the banking inquiry. I welcome a number of things. First, it is good to have an experienced judge in this sector. It is not going to be easy for anybody to take a fair view in terms of how analysis is conducted of the size of these loans. These are loans of tens of millions of euro, and potentially hundreds of millions of euro, and the analysis must be conducted on like with like. Mr. Justice O'Keeffe is an experienced judge in this area, which is very good.

I must take issue with my colleague, Senator Darragh O'Brien. We do not usually bang heads over issues but when he says that the track record of this Government is not great, I must remind Members of what IBRC is. This is information I have from the banking inquiry which has been put on the record. IBRC is the merger of Anglo Irish Bank and Irish Nationwide Building Society. The loan book of Anglo Irish Bank was 82% commercial real estate lending, 1% mortgage residential lending and 17% corporate lending. That is what is involved. Irish Nationwide Building Society had a loan book of €10 billion and it lost half of it, which is unprecedented and unheard of in practically any jurisdiction. That is what we are examining, and I welcome the opportunity to do so.

It is very easy to create doubt and throw mud, and much mud has been thrown on this issue. I am glad there will be an opportunity for this to be independently and objectively analysed in respect of losses of €10 million or more. People continually ask me, as a member of the banking inquiry, where the money went and how the €40 billion this State put into lending and financial institutions vanished. It did not vanish. It went into losses of this nature and in particular on losses in NAMA. Eventually I believe we will have to conduct an analysis of where all of the losses went in the banking sector. However, that is for another day, not this occasion. The NAMA write-off was €42 billion. When I was elected to the other House in 2007, that was equivalent to our national debt. That has been left aside; it will be a conversation for another day. This commission relates to potential losses of €10 million or more in IBRC.

I accept that there is public concern about this matter, and I welcome the Minister taking the opportunity to allay fears by setting up this commission. I look forward to analysis that is clear and unequivocal. Like Senator O'Brien, I hope there is nothing untoward. There is nothing easier than to say that something dodgy went on. One keeps kicking that about and, God knows, there are plenty of commentators who are able to kick that about and create the doubt. I believe it was Disraeli who said that a lie gets half way around the world before the truth gets its boots on. I certainly hope Mr. Justice O'Keeffe will be able to get to the bottom of this matter.

Regarding Siteserv, there has been much analysis about that already.

I believe Mr. Walter Hobbs of Virgo Capital provided a good service for the State. Appearing on "Prime Time" a number of weeks ago, he was unequivocal in dealing with the matter. It is also good that the agents and advisers of IBRC will be subject to analysis. Let us have it all out in the open and put all of the information on the table in order that the process of throwing mud in the hope it will stick will fail.

I wish to finish by mentioning the role of the Minister in the matter. We have been fortunate to have him and I am not one to give plaudits easily. As has been said in the other Chamber, he has probably been the best Minister for Finance in the history of the State and his actions in this matter underpin that statement. The sooner we have the information and the commission concludes its investigation the better in order that we can verify that nothing untoward happened.

Senator Sean D. Barrett

I welcome the Minister. I second what Senator Michael D'Arcy said about the matter. We should remember the late Brian Lenihan today on the anniversary of his death. Last night we were honouring W.B. Yeats. When he was asked what went on in the Seanad, he said the real work of legislation was done in meetings dominated by "old lawyers, old bankers, old businessmen, who ... have begun to govern the world." There is a feeling of déjà vu that the old lawyers, bankers and businessmen are back again. The unfortunate aspect of what we are being asked to do is that it brings back the nightmare of 29 September 2008, the nightmare with which the Minister has had to cope every day since assuming office. I commend him for how he has borne the burden.

On page 27 of the IMF working paper, WP/12/163 by Luc Laeven and Fabián Valencia, dating from 2012, our fiscal outlays were put at 40.7% of GDP. This compared with a figure of 4.9% for Austria; 6% for Belgium, 1% for France and 1.8% for Germany. As Senator Michael D'Arcy said, the banking sector has imposed appalling burdens on the country. There is despair that it is happening all over again. I welcome the Minister's attempts to try to have the issue sorted out.

Given the numbers Senator Michael D'Arcy has given us, why is IBRC still in place? When people saw the sign being removed on St. Stephen's Green just around the corner from here, they thought that was the end of it and that it would not come back to haunt the people again, given that the burden has been so great and the memories of it are so appalling. We have been looking at figures such as 100% loans for property, a banking sector that did nothing other than lend for property, hopeless regulation and auditing of the sector by auditors who did not know what was going on in banks that within months would be going to the Department of Finance to seek bailouts.

I worry that NAMA will turn out like the Land Commission which was founded in 1881 and finally abolished in 1991 by the then Minister of State, former Deputy Paul Connaughton. When the State wants to sell something, why does it not put it on eBay or go to Adam's to have an auction? The more hugger-mugger or secrecy there is, the more the public believes secret deals are done which result in claims such as those made in the Dáil in recent days. It is controversial that we transferred massive resources - more than any other country - to the failed borrowers from failed banks and that the burden is still being borne. We have the problem of regulatory capture, rent and subsidy seeking which is likely to arise when there is the possibility of making large amounts of money when doing these deals. Too many at the centre of the banking collapse have paid nothing, while the majority of the people have paid immensely. We know that the recession the banks caused exacerbates inequality. There is considerable evidence from the United States and other countries in that regard. It raises the issue of the preferential treatment of insiders at the expense of the public.

The two zombie bodies, Anglo Irish Bank and Irish Nationwide Building Society, should have been shut down immediately. It would have been a blow at the beginning, but the economy would now be starting to recover and their assets could have been transferred to those who would have used them better. I compliment NAMA on not being the subject of the stories and rumours we have heard in recent days about IBRC. However, the longer we delay in shutting them down, the greater the possibility that sharp dealing can take place and that the rent-seeking tendencies of so many in the economy will assert themselves. There are subsidy seekers, while there is scope for malpractice. It might be time to finally draw a line under the banking crisis which has done so much damage to the country.

I commend the Minister for the speed of his response in this case. I regret that he has had to do it. He has had enough problems in recent years in coping with the immense debt-to-GDP ratio caused by the banking crisis in Ireland and the public would like to see a finishing date. The real economy is growing again. I know that the Minister has taken measures to promote investment by banks, other than their property fixation. Employment and enterprise are growing and we have benefited from the exchange rate movement in our favour. There are very good reports today from the ESRI. Such positive things will always be welcome, but the banking matter we are discussing revives awful memories of a terrible time at huge cost to the economy.

Senator Aideen Hayden

On the anniversary of the death of the late Brian Lenihan, we should all reflect on the contribution he made to political life in the country and the part he played in resolving the crisis the country faced. I very much respect the role played by Deputy Catherine Murphy in this entire matter, as well as the roles played by Fianna Fáil, Sinn Féin, the Labour Party and the Minister. This is a very important issue and I do not believe we can move on from the banking crisis, in the investigation of which two of our colleagues are involved, without investigating fully all of the issues that arise. I welcome them back to the House. As colleagues on the coalition benches, we do not see as much of Senator Michael D'Arcy as we used to.

While I do not particularly agree with it, in a number of media reports the point has been made that strange times led to difficult decisions and that it is very difficult to put values on assets and put in perspective things that happen in the middle of a crisis. We have heard that excuse made about activities in industrial schools, about what happened in the 1950s and in Galway which resulted in the deaths of young children and so forth. That is not good enough. It is not good enough to walk away from any suggestion the Government and the country walked away in situations where people who had money became even richer after a disaster hit the population of the country. It is a complicating factor that one of the individuals involved in this entire debacle, certainly in a number of court actions, is a significant and wealthy public figure.

The figure has a strong presence in the Irish media. Therefore, it behoves us even more as parliamentarians to make sure that we put in place robust processes and procedures. We must ensure that decisions that were taken by a bank, that was under State control, its actions, processes and procedures were absolutely, completely and entirely robust.

A question has been raised, particularly by Sinn Féin, about whether the terms of reference will cover the essential issues that have been raised, particularly the timing. I shall address the issue of the terms of reference for a moment. The first point was made about the actual document SI No., which has been left blank, of 2015. The first paragraph details the areas that shall be covered by the commission of investigation and the stipulated time period has raised some concern. It reads:

1. The Commission shall investigate all transactions, activities and management decisions, other than those relating solely to the acquisition of assets by the National Asset Management Agency, which occurred between 21 January 2009 (being the date of the nationalisation of IBRC) and 7 February 2013 (being the date of the appointment of the Special Liquidators to IBRC).

There is a concern that those dates will not adequately cover some of the issues that have been raised.

I must admit that I examined this document very carefully and was comforted, and perhaps the Minister has addressed the matter, by paragraph 6(b) of the terms of reference which states: "where a contractual obligation was agreed during the Relevant Period", the date that I just mentioned, "but not executed until after the Relevant Period then the contract and any resulting loss shall be regarded as having been made during the Relevant Period." More important, the terms of reference sets out the following:

4. The Commission shall report on any other matters of concern arising from its investigation of the above matters and make any further recommendations as the Commission sees fit.

I have spent some time looking through this document and I am personally satisfied that it covers the issues raised. I am satisfied that it is broad enough and robust enough to cover the issues with the terms of reference that I have heard raised in the Dáil debate and in the media at large.

It is important to note that the judge concerned, Mr. Justice O'Keeffe, has a significant commercial background. That is an extremely important aspect.

As the Minister has said, it is incredibly important that the investigation is sufficiently resourced. No matter what way one puts it, ordinary people and taxpayers have been put on the line and must pay for what happened in this country. We must also reflect on the fact that many ordinary people have lost everything as a result of what happened in this country during the banking crisis. We owe them the truth and I believe the truth is the truth. I personally do not care how much it costs to get to the bottom of the matter, particularly when accusations have been made that people in positions of privilege and importance manipulated a system and came out of the other end of a disaster practically in a better position than they were in originally. Therefore, we owe ordinary people the truth. I ask the Minister to please ensure that adequate resources are made available for the commission and I do not think the timeline should be a moveable feast. The findings must be delivered in the timescale outlined which is what the people expect.

Senator David Cullinane

I move amendment No. 1:

1. To insert the following after “under that Act;”:

- “noting the deficiencies of the draft Order, calls on the Government to amend No. 5 of the draft Order to read: ‘the Commission shall, subject to section 6(6) of the Act, submit to the Taoiseach its final report in relation to its investigation no later than 31st October 2015.’; and

- further notes the deficiencies in the schedule to the draft Commission of Investigation (Irish Bank Resolution Corporation) Order 2015 and suggests the Government adopts an amended schedule that should read:

‘SCHEDULE

Terms of Reference for Commission of Investigation Concerning Irish Bank Resolution Corporation Limited

The Commission is directed to investigate and to make a report to the Taoiseach in accordance with the provisions of section 32 of the Commissions of Investigation Act 2004 (No. 23 of 2004) on the following matters:

1. The Commission shall investigate all transactions, activities and management decisions, other than those relating solely to the acquisition of assets by the National Asset Management Agency, which occurred between 21 January 2009 (being the date of the nationalisation of IBRC) and 12 March 2015 (being the date when the Progress Update Report prepared by KPMG and published by IBRC was released) (the “Relevant Period”); and which either:

(a) resulted in a capital loss to IBRC of at least €1 million during the Relevant Period, whether in consequence of a single transaction or of a series of transactions relating to the same borrower or entities controlled by the same borrower (“Relevant Write-Offs”); or

(b) are specifically identified by the Commission as giving rise or likely to give rise to potential public concern, in respect of the ultimate returns to the taxpayer; and

2. The purposes for which each such decision, transaction and activity referred to in 1 above are to be investigated are the following (and accordingly the Commission’s terms of reference extend to investigating):

(a) the processes, procedures and controls which were operated by IBRC in relation to the Relevant Write-Offs to ascertain whether the appropriate internal IBRC governance procedures and controls were adhered to in respect of the transactions under review and whether the said procedures and controls were fit for purpose;

(b) whether there is prima facie evidence of material deficiencies in the performance of their functions by those acting on behalf of IBRC, including the IBRC board, directors, management, the staff of the wealth management unit and agents, in respect of any transactions, activities and management decisions identified in 1. above;

(c) whether it can be concluded from the information available within the IBRC and relevant evidence and witness testimony as appropriate that the transactions were not commercially sound in respect of the manner in which they were conducted, the decisions made and the outcomes achieved having regard to the purposes of the Irish Bank Resolution Corporation Act 2013 set out in section 3 thereof;

(d) whether the interest rates or any extension to interest rates or any periods for repayments were given by IBRC on preferential terms that were unduly favourable to any borrower, where those interest rates resulted in a differential of more than €4 million in interest due over the standard applicable interest rates for loans of that nature or where the amendments give rise to or are likely to give rise to potential public concerns;

(e) whether, in respect of any transaction under investigation, any unusual share trading occurred which would give rise to an inference that inside information was improperly provided to or used by any persons, and in the event that such an inference does arise whether any such information was actually improperly provided or used;

(f) in relation to each transaction under investigation, whether the Minister for Finance or his Department took appropriate action to safeguard the public interest by enforcing proper governance and accountability oversight in respect of the transactions concerned, and whether he, or officials on his behalf, including the role of public interest directors;

(g) the role of the external consultants, including, but not limited to Blackstone Group and KPMG;

(h) the role of the wealth management unit of IBRC; and

(i) the beneficial owners of SiteServ shareholders.

3. The report to be made by the Commission in relation to the foregoing investigations shall:

(a) set out the scope and findings of the investigations in fulfilment of the purposes set out in 2. above;

(b) respect obligations of confidentiality and respect commercial sensitivity where those are not incompatible with the public interest; and

4. The Commission shall report on any other matters of concern arising from its investigation of the above matters and make any further recommendations as the Commission sees fit.

5. The Commission shall exercise discretion in relation to the scope and intensity of the investigation as it considers necessary and appropriate, having regard to the general objectives of the investigation.

6. In these terms of reference:

(a) “IBRC” means Irish Bank Resolution Corporation Limited;

(d) for the avoidance of doubt, references to transactions, activities and management decisions shall be construed as including references to amendments made to the terms and conditions of loans.’.”.

I welcome the Minister to the House.

Senator Barrett mentioned Yeats earlier. It might be more apt to quote Yeats who said: "Romantic Ireland is dead and gone, It is with O'Leary in the grave" and also, "fumbling in the greasy till". Both quotes are apt reminders of what happened in this State, over a long number of years independently of what will be discussed here today.

I have found no comfort in the Bill and the terms of reference which have been agreed by the Government, Fianna Fáil and some others. I cannot for the life of me understand why Members cannot accept the Sinn Féin amendment and I do not know why it was not accepted in the Dáil. If we want a commission of investigation to be fit for purpose then the Sinn Féin amendment should have been accepted.

The Government has simply not learned its lesson. I remind Senators what happened with the water services Bill. On three occasions the Government had to come back with its tail between its legs because it got that legislation wrong and now it must bring forward a fourth Bill. Let us hope the Government does not have to come back with an amendment, although I think it will, on this motion in order to amend the terms of reference because it got things wrong, and did not listen to the Opposition parties when we warned it about this situation. Sinn Féin made its position clear. It is unfortunate that the Minister has not accepted our constructive amendment which was supported by a number of Independents. I am sure some Senators will support our amendment here today as well. A second amendment has been tabled by two Independent Senators which Sinn Féin supports.

I welcome the opportunity to speak on this motion, on behalf of Sinn Féin. We are debating an extraordinarily important issue this evening but one would not think so due to the small number of Senators present. It is unfortunate that more Senators are not present. The motion before us aims to establish a commission of investigation into certain matters affecting IBRC. Unfortunately, it does not adequately address the seriousness of the issue at hand.

Following weeks of public concern, FOIs and other revelations, the Government has announced a full commission of investigation into the running of the IBRC, from the time it was nationalised on 29 January 2009 until it was liquidated on 7 February 2013. Therein, lies the problem. This new investigation means the internal investigation announced recently, to be conducted by KPMG, has obviously been replaced. The Government's U-turn is welcome but it is a U-turn none the less. The forcing of the Government to establish a statutory investigation is a victory for parliamentary democracy. It is also vindication of Opposition Deputies and Senators who called for a full commission of investigation all along.

Interestingly, Government Deputies and Senators have lined up to commend Deputy Catherine Murphy, which I do as well. Such commendation did not happen during the long number of weeks she called for this type of commission to be set up. Like Sinn Féin, Fianna Fáil and Independent Deputies and Senators, she was told there was no need for such a commission. At least we are all now on the same page. I genuinely and sincerely commend the Deputy on her diligence and tenacity in pursuing the truth behind the Siteserv transaction which has led us to where we are today.

As my colleague, Deputy Pearse Doherty, said in the Dáil yesterday: "For weeks this controversy has rumbled, with the Government stumbling from poor decision to poor decision." If this commission of investigation goes ahead, along the lines proposed by this Government, it will stumble into another poor decision. We do not want to be back here in a week or month to extend the commission of investigation if more information on transactions at IBRC, dated after 7 February 2013, become public. That scenario is more likely than less likely.

The commission of investigation, as it stands, is not acceptable to the general public and, therefore, is not acceptable to Sinn Féin. Yesterday, Deputy Pearse Doherty read into the record information that he had received on the lending practices at the IBRC which included decisions taken after liquidation. Much of this points to the need for the terms of reference to be extended to beyond the date of liquidation. The Government claims it can be investigated but we remain unconvinced. It should explicitly be included in the terms of reference. There is no point asking any of us to buy a pig in a poke. The Government has done so before for other issues and we can see where that got us. I would prefer to vote on something which is clear, fit for purpose and does what it should but, unfortunately, the motion presented by the Government is none of those things.

Moreover, other IBRC issues in the public domain will be excluded from the investigation because they occurred after the date of liquidation. As much as €21.7 billion in loans at IBRC have been disposed of since liquidation. Essentially, the Minister is setting up a commission of investigation that will not look at anything that happened since liquidation and will exclude €21.7 billion loans.

(Interruptions).

Senator David Cullinane

It might be useful if the Minister listened to contributions. We listened to his contribution and those of other Senators.

I have outlined the amendment we have proposed, which will be seconded by my colleague.

Senator Trevor Ó Clochartaigh

I second the amendment. Cuirim céad fáilte roimh an Aire. Ba mhaith liomsa cuidiú leis an leasú atá molta ag mo chomhghleacaí, an Seanadóir Cullinane, mar tá daoine ciapthe i ndáiríre faoin cur chuige a bhí ag an Rialtas, go raibh orainn agus ar an bhFreasúr an oiread brú a chur ar an Rialtas dul go dtí an chéim seo agus go bhfuil sé léir nach bhfuilimid sách fada go fóill.

It is a shame that the Government was dragged kicking screaming into this inquiry and that common sense will not prevail in terms of accepting our amendment because a number of issues remain to be resolved in regard to Siteserv. Yesterday Deputy Gerry Adams asked the Minister for Jobs, Enterprise and Innovation what he knew about the Siteserv deal. We have been asking the Minister to clarify what he knew about the issue for some time.

The IBRC inquiry had a cut-off date of 7 February 2013, which was the date of appointment of the special liquidator. Information passed to the Taoiseach by the Sinn Féin spokesperson for finance, Deputy Pearse Doherty, some of which was outlined in the Dáil, indicates that transactions, activities and decisions took place subsequent to that date. The special liquidator disposed of €21.7 billion in loans since that date. This dwarfs the amount during the period the commission has been asked to examine. Billions of euro of the people's money were transferred to private interests in a completely opaque manner. This is money which should have spent on hospitals, schools, houses and combating poverty. Senators from the Government parties have made eloquent speeches in this House on lone parents, housing and health. This money would have made a huge difference to the issues they raised. The sale of the Racing Post loans, which was criticised by a bidder as being less than transparent, and the sale of thousands of mortgages to unregulated vultures also fall within this timeframe. Contrary to the Government's claims, these are not included in the terms of reference of the commission and they could be subject to legal challenge or not investigated at all if the terms of reference are not amended. Our amendment proposes that the relevant period shall be from 12 January 2009 to 12 March 2015, inclusive, to cover all these transactions. The latter date was chosen because it is the date on which IBRC published its progress report.

I urge the Minister and Government party Senators to read our amendment and rethink their approach now rather than require us to return to the matter at some future date. This is not the first time we have lacked transparency in financial matters. NAMA was excluded from freedom of information provisions and its lack of transparency is regularly criticised in this House. That is, unfortunately, par for the course in the Department of Finance but it is not too late to change the culture in order that the public can get full disclosure through an independent and comprehensive inquiry into these issues. Tá súil againn go dtógfaidh an tAire an leasú atáimid ag moladh ar bord. Sílimid go bhfuil sé ar leas an phobail agus muna dtógann an tAire ar bord é, beidh orainn teacht chun cinn arís eile chun é a leasú amach anseo.

Senator Paul Bradford

I welcome the opportunity to contribute to the debate. Senator Ó Clochartaigh raised the question of culture. We should reflect deeply on the culture of our political system and how we interact with business. One of the main arguments in the lengthy report prepared by Mr. Justice Hamilton following the beef tribunal was that if the Houses of the Oireachtas were effectively used so that parliamentary questions received full and open replies and information was published properly, many of the events investigated by the tribunal, which cost the taxpayer tens of millions of euro, would not have come to pass. That was the politics of the early 1990s but very little has changed since then. A previous speaker referred to the anniversary of the death of the Brian Lenihan. I join other Senators in paying tribute to the former Minister for Finance. He died shortly after the 2011 general election, which we thought would be a watershed for the political and economic management of this country. In promising a democratic revolution, the Government told us that Paddy would be told the truth and treated with respect. The old politics of hidden deals and undisclosed information was going to be replaced by a new politics of openness. If that new politics had emerged, we would not require this inquiry because the questions arising would have been answered through normal parliamentary procedures. We have to develop a politics in which every elected Member is treated with respect when raising issues on behalf of the citizen and taxpayer and in which he or she is given the information he or she requests. The motion before us is a response to the concerns expressed about the operations of IBRC, in particular by Deputy Catherine Murphy. The response to her valid questions and the attempt to shut down the debate indicate we have a long way to go if we want a more mature politics or an accountable system of administration.

The amendment proposed by Senator Heffernan and me, which we might have an opportunity to move later, would ensure an interim report would be published in the near future. Numerous fine commitments and promises were made on the rate of progress of and resources for previous tribunals and inquiries but they tended not to be followed through. This is why we propose that an interim report be provided by mid-September. We also want the Seanad to be in a position to debate the report and, above all, a final report to be issued not later than 30 October. We did not choose 30 October to participate in a silly game of table tennis over the date of the general election but to put down a marker on how we operate inquiries. Resources should be provided to ensure the report can be completed by a certain date and it would be relatively easy to answer questions of a "Yes" or "No" variety. We also propose to include more transparently in the inquiry's remit the dealings of officials in the Department of Finance with IBRC. These are reasonable suggestions and while I appreciate that what was refused in the other House is unlikely to be granted here, I am still calling for such an approach.

I thank the Minister for offering me the five-minute opportunity. Again, we must ask ourselves that if we really wish to be parliamentarians on behalf of the public interest, why can we not order our business in a way that would allow people to actually make a reasoned contribution rather than just a rushed through script. Hopefully, I will have an opportunity to move the amendment at a later stage.

Minister for Finance (Deputy Michael Noonan)

I thank all the participants in this debate for their constructive participation. I have listened carefully to their concerns around the terms of reference of the commission of investigation and am confident they are largely addressed in the revised terms of reference. I will respond to some of those concerns, but before I do so, I draw attention to the discussion this evening about the details of specific customers and specific transactions and decisions taken by IBRC. The public concern being generated by these allegations is precisely the reason we are initiating this commission of investigation. Under the 2004 Act, the justification for such inquiries is public concern and public interest considerations. As I mentioned to Deputies in the Dáil, I encourage Senators who have received information that may be a cause for further public concern to bring these concerns to the attention of the judge.

Concerns focus on the role of the Department and political oversight by my predecessor, the late Brian Lenihan, and me. I assure Members who have raised similar concerns that under paragraph 2(f) of the terms of reference, the judge will be in a position to exercise judgment as to whether the Department and the Ministers took appropriate steps with the information provided. The concerns raised yesterday and repeated here this evening are covered by the current terms of reference. The commission shall investigate all transactions, activities and management decisions during the relevant period which are identified by the commission as giving rise or as being likely to give rise to potential public concern. This addresses the issue of managerial decisions and verbal agreements between IBRC and borrowers which have been discussed at length.

The terms of reference were broadened following consultation to include any situation where a contractual obligation, either written or oral, was entered into prior to the liquidation of IBRC but was not executed until after the liquidation. It is not the intention of the Government to restrict the commission's investigation into transactions, activities and managerial decisions of IBRC that have given rise or are likely to give rise to potential public concerns. I have already confirmed that the circumstances relating to a verbal agreement before the liquidation of the bank are within the scope of the terms of reference. I gave this assurance following consultation with the Attorney General and her office. In effect, this is the information put on the record of the Dáil last night by Deputy Pearse Doherty. According to the Attorney General, after consultation with her office and examining the Deputy's statement and the documents he provided to the office of the Taoiseach, this is within the terms of reference and will be pursued by the judge.

The other suggested amendments are largely included in the terms of reference following our productive consultations. Earlier today, I announced that retired High Court judge, Mr. Justice Daniel O'Keeffe, has agreed to serve as chairperson of the commission of investigation. I express my appreciation to him for agreeing to serve in this important role. I am confident that his strong commercial background as a chartered accountant and former chairman of the Irish Takeover Panel will be very helpful in the work of the commission.

Finally, I again thank all the Senators who contributed to this debate. I am confident that the majority of their concerns are addressed in the revised terms of reference and I look forward to the commission beginning its work. There has been much talk of openness and transparency and whether things would be in a better position if information was given by me as Minister. Apart from the speech made by Deputy Catherine Murphy, which was the subject of two High Court cases, every other fact on which everyone is building a case was provided by me either by way of reply to parliamentary question or through freedom of information. No investigative Deputies have produced new facts, there has been no information on the record, and the case made by Deputies who are friendly and Deputies who are hostile to me personally has been built on the facts I have put out. I have exercised my functions as a Minister because I have provided the facts and have done so fully.

Amendment put:

The Seanad divided: Tá, 6; Níl, 20.

Tá

Barrett, Sean D.
Bradford, Paul.
Crown, John.
Cullinane, David.
Heffernan, James.
Ó Clochartaigh, Trevor.

Níl

Bacik, Ivana.
Brennan, Terry.
Burke, Colm.
Coghlan, Eamonn.
Coghlan, Paul.
Comiskey, Michael.
Cummins, Maurice.
D'Arcy, Jim.
D'Arcy, Michael.
Gilroy, John.
Hayden, Aideen.
Higgins, Lorraine.
Kelly, John.
Moran, Mary.
Mullins, Michael.
Naughton, Hildegarde.
O'Keeffe, Susan.
O'Neill, Pat.
Sheahan, Tom.
van Turnhout, Jillian.

Tellers: Tá, Senators David Cullinane and Trevor Ó Clochartaigh; Níl, Senators Paul Coghlan and Aideen Hayden.

Amendment declared lost.

Senator Paul Bradford

I move amendment No. 2:

To insert the following after “Seanad Éireann on 9th June 2015”:

but calls on the Government to make the following amendments to the draft Commission of Investigation (Irish Bank Resolution Corporation) Order 2015:

- the Commission of Investigation shall submit to the Taoiseach an interim report in relation to its investigation no later than 14th September 2015 on the status and likely conclusion date of its work;

- Seanad Éireann shall, no later than 15th September 2015, be recalled for a debate on the interim report of the Commission of Investigation;

- the Minister for Finance resources and supports the Commission of Investigation in a manner that will ensure that it will issue a final report no later than 30th October 2015; and

after “SCHEDULE 2(f)” to add the following new paragraph:

- (g) In relation to each transaction under investigation, what protocols and controls the Minister for Finance and his Department had in place in respect of the transaction concerned and whether sanction was given for the transaction to occur; and

to amend SCHEDULE 1(a) by deleting “€10,000,000” and inserting “€1,000,000”.