Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Tuesday, 17 Feb 2009

Vol. 675 No. 1

Leaders’ Questions.

During my time in the House, I have rarely seen such an extent of anger on the streets in respect of the mismanagement and lack of leadership by the Government. The country is edging towards an economic precipice and there is no strategy, coherence or sign of action being taken to clear up the international markets' complete lack of trust and confidence in Ireland. Evidence emerged today of shares being hammered after the investment of €7 billion of taxpayers' money.

The people are disgusted beyond reason at what is happening. They are disgusted with the level of obscene payoffs for people who were central to activities that were neither ethical nor moral. It leads one to believe that if this continues for much longer, Ireland will face an economic crisis the likes of which we never have seen before. However, the Government has made no response of any coherence, direction or strength to deal with it. People are appalled by what has gone on.

Last September, the Taoiseach ignored the advice of his own experts to the effect that Anglo Irish Bank should be taken over. He followed this with a promise of €1.5 billion of taxpayers' money for recapitalisation that he was eventually forced to abandon in favour of nationalisation. In the past week, there has been evidence of allegations, rumours, stories and fact regarding what has gone on in respect of Anglo Irish Bank, with more to come. This is not business as usual, nor can it ever be. The buck stops at the door of the Government and the Taoiseach.


Hear, hear.

Who is the Government protecting?

Action has not been taken to sort out this issue. At present, the regulatory authority is carrying out an investigation, although it was itself fundamental to what happened. This is not how it should be. If the Taoiseach is to lead the nation to a point at which there is a restoration of some semblance of credibility and trust, he must take decisive action, which I have outlined in the past few days. We have heard about the manipulation of the assets and deposit base of Anglo Irish Bank. I do not want to impugn the Taoiseach's personal integrity in any way. However, will he confirm when he as Taoiseach and Head of Government knew about the transactions between Anglo Irish Bank and Irish Life & Permanent? On what date did he find out about those transactions?

It is very important that we protect the integrity of the financial system. Everything we have done has been with that in mind. I do not accept Deputy Kenny's contention that advice was ignored. In September the full advice was that all financial institutions of systemic importance had to be protected and dealt with in the way that we did.

Deputy Kenny went on to talk about the recapitalisation issue in regard to the €1.5 billion proposal, which was a step short of nationalisation, in our policy statement of 23 December. I made it clear in the House that, subsequently, governance issues came to our attention as a result of a due diligence that was carried out, having made that policy statement that we were prepared to put money into Anglo Irish Bank in the interests of maintaining the financial system. In doing that due diligence what emerged were governance issues which meant that the nationalisation of the bank should take place. It was not appropriate to impart partial information which had to be considered by the regulator and now by the Director of Corporate Enforcement.

One issue that must be cleared up for ourselves and for the country is that where any wrongdoing has occurred, if there is to be accountability, it must be in compliance with due process. If we do not accord due process, then we put at risk the very objective we are setting out to achieve, which is to make sure that those who are responsible for any wrongdoing are made accountable and that we create clear blue water between those activities which are unacceptable and a new regime. I realise the anger that exists in the community and share that anger in many respects. What I am trying to do is to make sure that this issue is dealt with through the mechanisms available to us, that the statutory authorities investigate the people concerned, that they take whatever steps are necessary to deal with them and that at the same time, in laying emphasis on that important issue of public confidence, we also lay important emphasis on maintaining our financial system and do not underestimate the difficulties we face in so doing.

That is what we are trying to achieve. Any contention to the contrary is incorrect. I take Deputy Kenny's point at face value and I appreciate it. Everything we are seeking to do here is to bring about a situation where those involved in wrongdoing or in practices that were not in compliance with proper corporate governance principles are held accountable. That is what we are trying to achieve. We seek to do so as quickly as possible but also to make sure that we maintain our financial and banking system which, like everywhere else in the world, is under stress.

Will the Taoiseach answer the question?

On the specific issue raised by Deputy Kenny, as I said, the governance questions were coming to light as we were making the decision on nationalisation and it was decided that this was what needed to be done. We did it for that reason.

Will the Taoiseach answer the question?

I asked the Taoiseach the date on which he found out about the transactions between Anglo Irish Bank and Irish Life & Permanent. This is important from his point of view as Head of Government. We have had a trail and drip of information, rumour, innuendo, allegation and fact. This is an important question for the Taoiseach to answer in his own interest. When did he find out about this?

When did the Minister for Finance know about the unwinding of the Quinn-Anglo position where, we understand, ten people were given €30 million each to boost the shares. Do we know who these people are? When did the Minister for Finance tell the Taoiseach about this? There is a difference between protecting the national interest and protecting the interest of the Fianna Fáil Party or that of Anglo Irish Bank.

That is disgraceful.

These are fundamental questions that must be answered now. As the Taoiseach knows, there is no trust and no confidence in Irish financial institutions among the markets. It is patently wrong that the regulatory authority should be investigating these matters when it is a fundamental part of the problem.

The board and senior management should be gone and the Taoiseach should take decisive action in that regard, not in an individual sense but to send out a message of a clear, fresh and new beginning in this regard.


Hear, hear.

That is fundamental.

On what date did the Taoiseach find out about this? Did the Minister for Finance tell him about the unravelling of the Quinn-Anglo deal? If there are issues of governance or criminal activity involved, why has the Government not sent in the fraud squad to investigate? People want answers quickly from the Taoiseach as our country edges ever closer to an economic precipice. Everybody has an interest in protecting our financial institutions. Everybody has an interest in ensuring our economy develops. However, the lack of leadership, strength and decisive action from the Government is only adding further to the confusion and the darkening clouds that lie ahead.

Does the Taoiseach know the names of the ten persons involved? Can he confirm that no member of the Government was involved in any way by encouragement, support or any other activity to facilitate this situation whereby ten persons were each given €30 million from Anglo Irish Bank?

Was any member of Fine Gael involved?


It is necessary from the Taoiseach's point of view and that of the Government that there be an absolutely clean sheet. Will the Taoiseach answer these questions? When did the Minister notify him of the unravelling of the Quinn-Anglo deal? Can he confirm that no member of his Cabinet was in any way involved in the decisions of a new golden circle? The Galway tent may be gone but its spirit seems to be alive and well.

Was any Fine Gael Front Bench Member involved?

The tent is falling down on top of Fianna Fáil.

In regard to the second matter, I do not know any names. I am not involved in any names.

The Taoiseach knows very well who these people are. We all have our suspicions.


A Deputy

Will Deputy McGinley put his suspicions on the record?

This is Leaders' Questions. Deputy McGinley cannot——

In the interests of the seriousness of the question being raised, I wish to respond to the Deputy. Whatever about Deputy McGinley's prejudices towards me, when I make a statement, I stand by that statement. I wish to make it very clear that I do not know the names of any people involved in this process, nor is it my function——

The Taoiseach is trying to respond to Deputy Kenny's question.

If we are not going to have a civilised discussion, fair enough.

If Deputy McGinley interferes again, I will have no alternative but to ask him to leave.

A meeting took place last March at which the governor indicated to me, as Minister for Finance, that a situation was developing in regard to the contracts for difference issue in Anglo Irish Bank. That had to be dealt with by the bank. It proceeded with that and Mr. Quinn made a statement on 13 July relating to it. It was indicated at that time that the matter had been resolved. I had no indication and no involvement whatsoever in names of any description. That was not my function. Nor do I have available to me information regarding the current investigation being undertaken by the Financial Regulator and the Director of Corporate Enforcement. That issue has arisen as a result of a due diligence that took place after the policy statement made in regard to recapitalisation.

In regard to the other matter, as I said, I received a telephone call in Japan from the Minister for Finance. His discussions with me at that time related to the need to proceed with the nationalisation on the basis of what was emerging in regard to directors' loans and other corporate governance issues which he said had been referred to the regulator. That is where it was at and there were no further details at that point.

What is the date?

There are many unanswered questions.

He is hiding something.

The Taoiseach said he knew about the Quinn situation in March and that his understanding was that the matter was resolved with the statement on 30 July from the Quinn group. We now know that the so-called resolution of the Quinn issue involved an arrangement whereby Anglo Irish Bank provided €300 million to ten wealthy individuals, who in turn used the money to buy shares in Anglo Irish Bank. According to newspaper reports at the weekend, the loan arrangement that Anglo Irish Bank made with the ten individuals was on very favourable terms to the point where there was no security against the loan other than the shares. The net effect of this is that the taxpayer is left with a bill for €300 million following the nationalisation of Anglo Irish Bank.

There are a number of questions I would like answered about this arrangement. Did they Financial Regulator, the Department of Finance or the Minister for Finance know about the arrangement involving the ten individuals when the decision was taken to proceed with the bank guarantee in September? Were details of the arrangement included in and described in the PricewaterhouseCoopers report, which the Taoiseach did not receive and which the Minister for Finance did not read in full? Did the Taoiseach and the Government know about the arrangement involving the ten individuals when the decision was made to proceed with the nationalisation of Anglo Irish Bank? If the Taoiseach knew about it, why was the House not told about it?

In response to comments made by Deputy McGinley, the Taoiseach said he does not know who are the ten individuals. I do not want to challenge the integrity or credibility of the Taoiseach but I find that difficult to accept. If this arrangement, involving ten individuals, was made and linked so intimately with the Quinn arrangement, and this led initially to the guarantee scheme and ultimately to the nationalisation of Anglo Irish Bank, I find it difficult to accept that the Head of Government that nationalised Anglo Irish bank would not know about the extent of that arrangement. The people of the country need to be told who these individuals are. When will we find out who they are? This is no longer a matter of commercial confidentiality and the confidentiality of the individuals. We now own the bank and we are stuck with the debt. Teaching assistants are being let go, children are being told they cannot get vaccinations, book grants are being abolished and staff of the State are being levied because of the financial and economic difficulties that arose from this. We need to know the names and identity of this golden circle. It is no longer a matter of commercial confidentiality. This is the rotten borough of Irish banking. What has been going on ranges from what might be mildly described as impropriety to illegality and criminality. It must be outed and we need to know who is in the golden circle. Who were these ten people? If the Taoiseach does not know, will he find out and tell the House?

And tell the country.

I want to be clear with Deputy Gilmore. There is no reference to this matter in the PricewaterhouseCoopers report. Deputy Gilmore referred to arrangements that were the other part of the resolution of this unwinding of the CFDs that Mr. Quinn had built up in the bank. Regarding loans by Anglo Irish Bank to customers for the purchase of Anglo Irish Bank shares and the Government's knowledge of the matter, as Minister for Finance I became aware, from contacts between the Department of Finance, the governor and the Financial Regulator over the course of last year, that a large overhang of shares were held by the Quinn group and related persons in the family. This was considered by the bank and the market to be a source of instability and the institution was seeking a resolution of the issue. The details of this were a matter for Anglo Irish Bank and, as appropriate, the Financial Regulator. The Minister for Finance was advised in late July 2008 that a number of investors had invested in Anglo Irish Bank but the Minister was not advised of who the individuals were or the nature of the transaction. As a result of due diligence recently undertaken on behalf of the Minister, certain matters in connection with transactions involving the Quinn stake in Anglo Irish Bank and related loans to Anglo Irish Bank customers for the purchase of shares came to the attention of the Minister and these are now being investigated by the various regulatory bodies, including the Financial Regulator and the Office of the Director of Corporate Enforcement.

In January, the Government made clear that an important factor in the decision to nationalise Anglo Irish Bank was concern that corporate governance issues at Anglo Irish Bank could destabilise the bank and threaten the stability of the financial system. However, it would not have been appropriate for the Government to publicly disclose partial information that was, and remains, the subject of investigation by the responsible statutory authorities. As part of its normal operations, the annual accounts of Anglo Irish Bank will be published in the coming week. I understand there will be detailed notes in the accounts that will address the matter of loans issued by Anglo Irish Bank for the purchase of its shares as well as the transaction involving Irish Life & Permanent. The new board of Anglo Irish Bank is reviewing corporate governance practices of the bank and will put in place arrangements to guide the bank in the future. I am confident the new board will pursue the necessary changes in this regard.

In the midst of the ongoing investigations into corporate governance at Anglo Irish Bank, the Government's priority is to ensure the stability of the Irish banking system. Depositors and creditors with Irish banks have been and will be protected and the Government will ensure that actions that cause damage to the reputation of our financial system are fully pursued in accordance with the law.

Deputy Gilmore suggested that he found it difficult to believe me. I am telling the truth. This is an internal arrangement of Anglo Irish Bank that was understood at the time to be in compliance and that was found in due diligence to raise certain questions that are being addressed by the Financial Regulator and the Director of Corporate Enforcement. Those investigations must be completed as quickly as possible so that full details and facts can be provided by those with the statutory authority to do so. I will not get involved in rumour or anything else. I deal with the facts and the facts are as I have outlined. If Deputy Gilmore accepts my integrity, as he says he does, that is the situation and I have no reason to say otherwise. If I knew, I would tell him.

I want to make it clear to Deputy Gilmore and to all Members that the House is not a court and a Member's disclaimer of the accuracy of a statement attributed to him or of a particular action attributed to him must be accepted by the House. There is no other way of doing business.

I accept what the Taoiseach says. I am not trying to impute anything to him. I want to pursue further what the Taoiseach said in his reply. The Taoiseach said he knew in March about the Quinn overhang in Anglo Irish Bank. Did he know the full extent of it in March? The Taoiseach says he thought it was resolved in July. Given what we now know, did he know the full extent of how it was resolved — so-called — in July? The Taoiseach keeps referring to corporate governance, which is becoming a mantra in these discussions, and said the Government discovered corporate governance issues in Anglo Irish Bank. Corporate governance is becoming a code phrase. We do not know yet for what it is a code, but it is code for something.

Did the Taoiseach and his Government know about the arrangement involving the ten individuals when the decision was made to nationalise Anglo Irish Bank? If the Government knew this information, why was it not shared with the rest of us who were asked to approve the legislation?

As I explained to Deputy Gilmore with regard to the overhang of shares, I, as Minister for Finance, was informed, to ensure that the impact on the stability of the bank would be off-loaded and unwound. That was a matter which Anglo Irish Bank was proactive in seeking to achieve, as it understood the difficulty being caused. Others were gambling or suggesting——

That is right. Those are the correct words.

That is what he really thinks.

——that the share price would go down. These were in hedge funds or whatever.

They were gambling.

I am not having an argument about what words to use. I am trying to explain to people the context of what was going on and why it was important it be unwound. Part of that was the conversion of those contracts for difference to 15% of shareholding for the Quinn family. There was also the other question of other investors taking up the remainder. As I understand it, all of those ten were under the thresholds and the action was therefore not disclosable under law. It was under 3% of a shareholding.

The Taoiseach knew about this in July.

No. I am trying to explain the facts. The Financial Regulator obtained legal advice from Anglo Irish Bank's advisers regarding the fact that this transaction was in compliance, and this was accepted at the time. It was a matter between the Financial Regulator and the bank rather than one involving me as Taoiseach or the Minister for Finance.

The Financial Regulator knew about this.

The Taoiseach cannot be interrupted.

Was that why he got eight months of extra salary?

The Deputy should be serious.

The Taoiseach cannot be interrupted. This is Deputy Gilmore's question.

He got all that extra pay.

I would like to answer the questions raised.

These interruptions cannot be tolerated.

The issue, as I understand it, was accepted by the Financial Regulator at the time on the basis of the legal advice furnished.

Was that in March?

Whose legal advice? Was it that of Anglo Irish Bank?

It was the legal advice of Anglo Irish Bank.

There was no independent advice.

Was it Arthur Cox Solicitors?

The due diligence that arose in December raised certain questions which were referred to the Financial Regulator, who also referred them to the Office of the Director of Corporate Enforcement. As I have said in regard to this matter, it would not be appropriate to bring forward partial information which is still under investigation. We await the outcome.

What we are concerned with here relates to corporate governance, the loans of the directors and the Irish Life & Permanent back-to-back loan, and there is also the question of the unwinding of the contracts for difference with the investors and the Quinn family. Those are the issues of corporate governance arising now and they are under consideration and investigation by the relevant authorities.

Did the Taoiseach know about it?