Written Answers Nos. 267-276
267. Deputy Michael McGrath asked the Minister for Finance if a High Court judgment against a person would disqualify that person from serving on a board of a credit union under the new fitness and probity regime. [4214/13]
View answerThe statutory basis for the Fitness and Probity regime is the Central Bank Reform Act 2010. The provisions were commenced for credit unions on 24 September 2012 and require Central Bank regulations and a code of practice to be in place before being fully implemented. The Central Bank has informed me that the Fitness and Probity regime for credit unions is undergoing consultation and is set out in Consultation Paper No. 62 which is available on the Central Bank's website at www.centralbank.ie/regulation/poldocs/consultation-papers/documents/cp62%20fitness%20and%20probity%20regime%20for%20credit%20unions/cp%2062-%20fitness%20and%20probity%20regime%20for%20credit%20unions.pdf. The final date for submissions on this consultation is 1 March 2013. It is proposed that the Fitness and Probity regime for credit unions will commence from 1 July 2013, with phasing and transitional arrangements applying to the implementation of the regime. In applying a Fitness and Probity regime to credit unions, the Central Bank’s aim is to improve governance standards at board and management level within the credit union sector by ensuring that individuals who exercise significant influence and control in a credit union are capable, competent and financially sound individuals with the appropriate skills, experience, knowledge and integrity to manage and govern the credit union for the benefit of all stakeholders.
The Central Bank has issued non-statutory guidelines in relation to the current fitness and probity regime for regulated financial service providers. These guidelines set out the approach to be taken where the holder of a controlled function (CF) has been declared bankrupt or is subject to a judgment debt. Such a person must be in a position to demonstrate that his or her ability to perform the CF is not adversely affected to a material degree by that matter. A regulated financial service provider must assess whether an issue is material to a particular CF or pre-approval controlled function. The Central Bank has set out a number of matters which should be considered in such an assessment, including the seriousness of the matter and its relevance to the duties to be performed. It is anticipated by the Central Bank that the guidance provided to credit unions on implementation of the Fitness and Probity regime for credit unions will be consistent with the approach in the existing Fitness and Probity regime.
268. Deputy Seamus Kirk asked the Minister for Finance if he has received notification of motions passed by Dun Laoghaire-Rathdown County Council, Fingal County Council, Leitrim County Council, Longford County Council and Offaly County Council, supporting the findings in the recent Retail Ireland black market report which outlines proposals to tackle the activity of criminal gangs in the laundering of fuel, smuggling of cigarettes and sale of other counterfeit goods, which is estimated to cost the taxpayer €861 million each year, as set out in Retail Ireland report Tackling the Black Market and Retail Crime; his views on the concerns as expressed by the elected members of these local authorities; the action he proposes to take to address the illicit trade; and if he will make a statement on the matter. [4233/13]
View answerTo date, I have only received notification of the motion passed by Leitrim County Council in relation to the Retail Ireland report. I share the concerns expressed by the elected representatives with regard to the loss of revenue arising from these illegal activities. With regard to action to deal with the illicit trade, I am advised by the Revenue Commissioners that they are mindful of the unfair competitive advantage gained by those businesses that do not fulfil their tax obligations. Revenue’s tax and duty compliance programmes are under constant review to ensure they are focussed on the areas of greatest risk, including risks from the shadow economy. Revenue tackles the problem of the shadow economy through a range of compliance and audit interventions including targeted special projects. A variety of methodologies are used by Revenue to identify those who are operating in the shadow economy including covert surveillance, cold calls to businesses and venues as well as pre-arranged aspect queries on specific items. In addition, joint operations are conducted with the Department of Social Protection using Joint Investigation Units and there is a strong focus on cash businesses, given its potential high-risk nature.
I am confident that the Revenue Commissioners are pursuing a programme that is dealing in a very determined way with tax evasion in all its forms. In 2012, Revenue carried out more than 537,000 compliance interventions, yielding more than €492 million. For the period January to August 2012, specific Shadow Economy Projects carried out by Revenue show that in the cash business, white-collar cash, construction and rental sectors, a total of 1,963 audits were undertaken, with a yield in excess of €62 million. Considerable success has been achieved in combating the illegal trade in tobacco products. In 2012, Revenue’s Customs Service seized a total of 95.6 million cigarettes from 8,105 seizures. A further 5,276 kg of other tobacco products were taken in 2012 from 1,395 seizures.
In addition to the ongoing enforcement action against the illegal fuel trade, steps are being taken to ensure enhanced control and supervision at all stages of the fuel supply chain. Key actions include a strengthening of the licensing arrangements for businesses selling auto-fuel, and of the enforcement of licensing requirements. As well as these important licensing changes, a requirement operates from 1 January 2013 for all fuel traders to make electronic monthly returns to Revenue on their fuel transactions. This will facilitate Revenue in detecting unusual or anomalous patterns of activity. Given the links of organised criminality with the illegal fuel trade, Revenue works closely with An Garda Síochána in combating it. Searches undertaken as part of intelligence-led operations have resulted in a considerable number of seizures of diesel and the closure of laundering plants, particularly in Border counties.
The Revenue Commissioners advise that in 2012, 11 oil laundries were detected and shut down and 199,000 litres of oil were seized along with 28 vehicles and five trailers. There were ten arrests in the course of these operations. In the period January to November 2012, 56 premises were closed. Finally, I am further advised by the Revenue Commissioners that they hold regular meetings with trade and representative bodies through The Hidden Economy Monitoring Group where the risks posed by shadow economy activities are discussed. The Deputy should also note that changes are frequently made in tax legislation aimed at counteracting shadow economy activity. Two examples from 2012 include the introduction of the electronic Relevant Contracts Tax regime and an enhanced penalty regime for employers who fail to operate PAYE regulations fully.
269. Deputy Michael McGrath asked the Minister for Finance if he will provide a breakdown of the levies currently being applied to home, motor and commercial insurance, including a history of each of the individual levies; and his views on the timeframe that he expects each levy to remain in place. [4251/13]
View answerThe Deputy should note that the only levy being applied to home, motor and commercial insurance is the 2% Insurance Compensation Fund (ICF) levy which operates under the Insurance Act 1964 and came into effect from 1 January 2012. It is expected to generate €65 million a year and will have to repay the €890 million advanced to date by the Exchequer to the ICF and on which a commercial rate of interest is applied. The timeframe for its application is expected to be in the region of 15 years. It should be noted that a number of variables may impact on this time period, the most important of which is an increase in the volume of non-life insurance products sold in the future. A higher figure for this would lead to a larger annual amount being generated by the 2% levy. The ICF levy should not be confused with a 3% stamp duty on non-life insurance premiums introduced in 1982, which is often referred to as an insurance levy. This Stamp Duty forms a part of general stamp duty receipts and is paid into the Central Fund along with other tax receipts. The ICF levy has only been applied once before to meet the liabilities of an insolvent insurer when it was introduced on 1 January 1984 following the collapse of PMPA. The levy was paid by all non-life insurers at a rate of 2% until 31 December 1991. The rate was reduced to 1% from 1 January 1992 to 31 December 1992 and ceased to apply from 1 January 1993 as it was felt that sufficient funds had been collected to enable the successful completion of the administration of the former PMPA.
270. Deputy Patrick O'Donovan asked the Minister for Finance with reference to the public service reform document published by the Department of Public Expenditure and Reform on 17 November 2011, Appendix IIa, Bodies to be rationalised, Amalgamated or Abolished in 2012, the progress that has been made on those bodies; the changes that require legislation; the expected timeframe for conclusion; and if he will make a statement on the matter. [4287/13]
View answerThe Deputy in his question refers to Appendix IIa of the Public Service Reform Document. In Appendix IIa only one proposal is listed under the heading Department of Finance/Department of Public Expenditure and Reform. That proposal was to merge the Commission on Public Service Appointments (CPSA) with the Ombudsman’s Office. The Department of Public Expenditure and Reform has advised my Department that this merger has been completed and is legislated for in the Ombudsman (Amendment) Act 2012.
271. Deputy Shane Ross asked the Minister for Finance the number of occasions that he has met the Chief Executive of IBEC, Mr Danny McCoy, since the last general election; the purpose of the meeting; the date of the meetings; the outcomes; the other attendees; and if he will make a statement on the matter. [4314/13]
View answerI met Mr. Danny McCoy of IBEC on 19 October 2011 and 31 October 2012 to discuss pre-budget issues. I have attended a number of conferences hosted by IBEC, including the Property Industry Ireland Conference and others, where I would have met representatives of IBEC including Mr. McCoy. In addition, officials from my Department have met representatives of IBEC on a number of matters. My Department analyses the publications and reports of IBEC to consider their analysis and recommendations in the context of the preparation of Government policies.
272. Deputy Pearse Doherty asked the Minister for Finance if the European Commission has approved the valuations and transfers of loans from the participating institutions to the National Asset Management Agency, that were the subject of tranches three and four which had a book value of €19.2 billion and were transferred to NAMA in June 2011 and tranche five which has a book value of €27.6 billion which was transferred to NAMA in March 2012; if the European Commission has not provided its full approval; and the reason for the delay. [4364/13]
View answerI wish to reassure the Deputy that there has been no delay in dealing with the final tranches of loans acquired by NAMA. The Deputy may be aware that following the completion of NAMA’s due diligence of acquired loan assets, the Financial Regulator of Ireland carries out its own independent validation of the transfer process. This was also done in the case of the earlier tranches and is in line with European Commission guidelines designed to ensure there is full transparency in relation to state aid. I am advised that in relation to the final tranches, this validation work will be concluded shortly and at that point my Department will be in a position to apply to the European Commission for its full approval.
273. Deputy Michael McGrath asked the Minister for Finance if he will show separately in respect of each source of funding, EFSF, EFSM, IMF each bilateral arrangement, under the EU-IMF programme of assistance the blended cost of funding drawn down to date; and if he will make a statement on the matter. [4367/13]
View answerAs at 31 December 2012, the nominal liability of EU-IMF Programme loans amounted to €56.4 billion. Of this, loans from EU sources, including the bilaterals, amounted to €37.4 billion and loans from the IMF amounted to €19 billion. After adjustment for below-par issuance, deduction of a prepaid margin of €530 million, and the effect of foreign exchange transactions, the amount received by the Exchequer as at 31 December 2012 was €55.7 billion. I am advised by the NTMA that the position on the interest rates for our programme loans is as follows: In terms of the EFSF, €6.7 billion of Ireland’s EFSF loans are at fixed interest rates which were based on a matched EFSF bond/loan structure. As a result of changes to the EFSF’s structure which removed the direct link between specific bond issues and programme countries, the balance of Ireland’s disbursed EFSF loans, currently €5.5 billion, is part of a pooled system whereby all programme countries pay the same interest rate. The pooled interest rate is calculated daily and is based on the EFSF’s cost of funds in managing the pool. This can be characterised as the weighted average cost of its bond and bill issuance. As at 31 December 2012 the blended interest rate on Ireland’s EFSF loans was 2.82%.
Exceptionally, Ireland has one EFSF loan tranche of €1.27 billion which is considered to be part of the pool but has a fixed interest rate until February 2015, at which point it will roll at the pooled interest rate. The effective interest rate on Ireland’s EFSM loans is based on the EFSM’s cost of funds when it issues bonds. Such issuance is matched against the loans. Some of its matched issuance can be spread across both Ireland and Portugal. As at 31 December 2012 the blended interest rate on Ireland’s EFSM loans was 3.10%. The interest rate on the United Kingdom’s bilateral loan to Ireland is fixed and is based on the weighted gross redemption yield on all UK Debt Management Office gilt issuances to the market in the six-month period up to the date of the disbursement of each portion of the loan, plus a service fee of 18 basis points. As at 31 December 2012 the blended interest rate on Ireland’s UK loans was 2.70%. The interest rate on both bilateral loans from the Kingdom of Sweden and the Kingdom of Denmark is floating and is based on the three-month Euribor plus a margin of 100 basis points. As at 31 December 2012 the blended interest rate on these loans was 1.23%.
The interest rate on the IMF Extended Fund Facility is tied to the IMF’s market-related interest rate, known as the basic rate of charge. As the IMF loan is provided in Special Drawing Rights, which is composed of a basket of four currencies (USD, EUR, GBP, JPY), the interest rate is constructed from three-month Eurepo, US and UK Treasury Bills and Japanese Government Discount Notes rates plus a margin of 100 basis points. Borrowings of up to three times a country’s IMF quota are subject to the basic rate of charge. Borrowings above three times quota attract a surcharge of 200 basis points which is in addition to the 100 basis points margin which forms part of the basic rate of charge. This surcharge rises to 300 basis points three years after the loan size exceeds three times the quota. As at 31 December 2012 the overall blended euro equivalent interest rate on Ireland’s IMF loan was 4.16%. The Deputy should note that the mixture of floating and fixed interest rates across facilities and, in the case of the EFSF within a facility, makes it difficult to compare one facility directly against another as they contain different interest rate risk profiles and maturities. In addition, the floating interest rates quoted are at a point in time and are, therefore, subject to change depending on movements in market rates. Subject to these caveats, the NTMA has estimated that the all-in fixed euro equivalent cost of loans received under the EU-IMF programme was 3.36% at the end of December 2012.
274. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 215 of 22 January 2013, the name of the licensed institution on the banking licence used by Irish Bank Resolution Corporation. [4379/13]
View answerI have been advised that Anglo Irish Bank Corporation plc is the name of the licensed institution on the banking licence used by IBRC.
275. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 215 of 22 January 2013, if Irish Bank Resolution Corporation, in which he is the sole shareholder of 100% of the shares, can meet Central Bank of Ireland banking licence criteria as set out in the Licensing and Supervision Requirements and Standards for Credit Institutions. [4380/13]
View answerIBRC has a banking licence and is regulated by the Central Bank of Ireland. I have been advised that as disclosed previously in the Bank’s published accounts, IBRC is not in full compliance with Irish regulatory requirements because it is an organisation in wind-down. Page 14 of the 2012 Interim Report clearly discloses the following under "Regulatory Compliance Risk":
Regulatory compliance risk primarily arises from a failure or inability to comply fully with the laws, regulations, standards or codes applicable specifically to regulated entities
in the financial services industry. The Bank continues to operate as a regulated entity and, as such, is therefore subject to certain minimum prudential and other regulatory
requirements. At 30 June 2012, the Bank is not in full compliance with all Irish regulatory requirements. While the Bank ensures that the relevant Authorities are kept fully
informed in this regard, noncompliance may result in the Group being subject to regulatory sanctions, material financial loss and/or loss of reputation.
276. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 215 of 22 January 2013, if Irish Bank Resolution Corporation, in which he is the sole shareholder of 100% of the shares, has been assessed by the Central Bank of Ireland for authorisation requirements as detailed in the instructions paper entitled Checklist for Completing and Submitting Bank Licence Applications. [4381/13]
View answerI have been advised that IBRC was subject to the relevant Central Bank of Ireland approval process at the time of the granting of its licence.
