I am pleased to be in the House but I am not pleased to be here to discuss this subject. I had intended being present yesterday evening to discuss Senator Costello's motion on a minimum wage. I apologise for my failure to attend but it was because of a Government meeting called for 6.30 p.m. I understand the National Minimum Wage Commission will report next week and, when it does, I will be delighted to return to the House to discuss the report after a period of time for its consideration has elapsed.
The report last night on RTÉ's 6 o'clock news contained the most damning allegations ever made against an Irish clearing bank. The fact that National Irish Bank has confirmed the substance of the allegations made by RTÉ is shocking. Most people will be amazed to hear that the bank took money from its customers, that it concealed that fact from them and that it failed to repay the money. People will be shocked to know that it happened eight or nine years ago. It is worth reading into the record the statement made last night by National Irish Bank. It began by saying that the incidents referred to go back many years and do not reflect current practices. It states that they were practised:
. in a small number of branches and in a limited number of accounts. It occurred in the late 1980s and early 1990s.
We accept that customers affected by the unauthorised practice were not advised of it and were not offered recompense at that time. The Bank regrets this. NIB will seek to identify such accounts and undertakes to reimburse any customers so affected.
Most people will be very cynical of a bank which became aware eight or nine years ago that money was being taken from its clients in some of its branches, which concealed this fact, which made no effort to repay the money in question and which issued a very limp apology only after these facts became public.
Banks command enormous trust in this economy. When people place their money in a licensed bank they expect it to be safe. It is important we have trust in the banking system. The allegations are seriously damaging for the banking industry, for industry generally and for the international reputation of Ireland. It is fair to say that we have successfully marketed the International Financial Services Centre on the basis that Ireland is a very good place for a bank or financial institution to operate in. It is a serious state of affairs when the trust between a bank and its customers breaks down.
When we became aware in January of the allegations surrounding the management of National Irish Bank's insurance policies, we wrote to the bank, received a response and referred that response to the Attorney General for advice and subsequently to independent senior counsel. That became available on 10 March and it advised a certain course of action. I wish to outline to the House how we dealt with these issues.
When the insurance matter became public, we were advised in the first instance that since the Department did not have the information in our possession, we had in the interests of natural justice to write to the bank and ask it for information. Following its response, the legal advice was that we could either write again to obtain further information or we could appoint an authorised officer under the Insurance Acts. We chose the latter and he was appointed last Monday. The delay in his appointment from 10 to 19 March is accounted for because I was in the United States and the Minister of State, Deputy Treacy, who was handling this matter, does not yet have the power devolved to him to sign or to approve the signing of a warrant for the appointment of an authorised officer. That officer went to the bank on Monday.
Last night, when we became aware of the new allegations, which was the first time we became aware the bank was taking money from its customers, that it did not acknowledge the fact and that it made no attempt to repay the money in question, the Government had an emergency meeting, which is very unusual and is an unprecedented step. However, we knew that what was evolving and emerging was serious not just for National Irish Bank and its customers but also potentially for the banking industry in Ireland and for the image of the country. We sought legal advice about the best way forward. We discussed the possibility of asking the Director of Consumer Affairs to carry out an investigation because he has responsibility for bank charges since 1996. He is now carrying out that investigation and he met with a banking representative this morning.
We also explored the possibility of petitioning the High Court under section 8 of the Companies Act to appoint an inspector to investigate what was happening in National Irish Bank. The advice as regards the appointment of an inspector is significant. An inspector has been appointed on only two previous occasions and the appointment has never been sought without a preliminary inquiry first being carried out by an authorised officer. The advice was that we had to be sure we had documentation and facts in our possession which would justify to a court the appointment of an inspector under section 8 of the Companies Act.
It was not until later last night, when National Irish Bank confirmed that the allegations were substantially correct, that we knew we had facts in our possession which had been confirmed and which may warrant the appointment of an inspector.
Throughout the day officials of my Department have been meeting with the Attorney General and with independent senior counsel to prepare the case to apply to the High Court for the appointment of either a single inspector or a team. It may well be and it is my preference that there should be more than one person because both a person with competency in accounting and one with competency in the law are needed. We are preparing that case but I am not certain whether it will be ready this evening. It could be tomorrow but I hope it will be no later than that. As I have been in the other House since 12.30 p.m., I have not had an opportunity to meet with the team since early this morning. I hope to do that shortly after I leave here.
In addition, I understand the Garda Fraud Squad has opened an office to receive complaints from members of the public with a view to carrying out a Garda investigation. I believe that is appropriate.
The nature of the inquiry, of which I hope the court will approve, must include who knew about these practices, who condoned them, who ignored them, who supervised them and at what level of the bank were they known. Why was no effort made to identify the customers involved and repay the money? I would like to know if any disciplinary action was taken against any bank officials on foot of these practices. I would also like to know the role of the internal and external auditors. These are issues which we can refer to the accounting profession because they must concern any professional body.
We also want the court to examine whether the inspector can cover the insurance issue. Suffice to say we want an inquiry which is as broad as possible, which gets at the truth and which in no way seeks to minimise what happened because this is very serious.
There have been a number of inquiries under the Companies Act. There were two section 8 inquiries, one cost £1.2 million and the other cost £220,000 but neither led to prosecutions. There have been section 14 inquiries, such as the inquiry into Telecom Éireann, which cost £800,000, and again there were no prosecutions. As far as I can influence matters, because the Minister for Enterprise, Trade and Employment has powers to initiate prosecutions in a limited number of cases, and if it is the case on foot of the inspector's report that alleged wrongdoing can be established against an individual or individuals, no matter who they are, it will be my intention to use the powers available to me in the Companies Acts. It is also my intention to refer the report to any other authority.
Under the Companies Acts the High Court can make a restitution order to ensure the customers of National Irish Bank who have been treated so badly are compensated. I hope the court will consider doing that.
I thank the House for this opportunity to make this statement. I have not been very comprehensive, I may have left things out but I will be delighted to take questions about this matter as it so important. This is my tenth inquiry into banks and other institutions in eight months, which is probably a record. I have had to tread carefully because, when I sought to appoint an authorised officer to a different bank in January, that bank succeeded in getting an injunction to stop me and succeeded in delaying the case in the courts. It was only when it saw the evidence and affidavits that it pulled back and agreed to co-operate with the inquiry.
Since I initiated inquiries late last year, not a week has gone by but I received a letter from some of the leading lawyers in the State. We must tread carefully, follow the procedures and take the best legal advice if we are to be successful and that is what we intend to do.
The Central Bank is carrying out its own inquiry. It is an independent regulatory authority who monitors and licenses banks in this State.
The Revenue Commissioners, another independent body, are carrying out their own inquiry in relation to tax evasion.
My responsibilities are related to company law, National Irish Bank is a limited company and therefore the powers available to me will be fully used if the court approves the petition which we will make as soon as possible.