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Seanad Éireann díospóireacht -
Tuesday, 20 Jan 2009

Vol. 193 No. 5

Anglo Irish Bank Corporation Bill 2009: Committee and Remaining Stages.

SECTION 1.

I move amendment No. 1:

In page 6, line 24, after "Minister" to insert "on behalf of the Oireachtas".

This amendment changes the definition of the role of the nominee. Some Senators complained on Second Stage about the lack of consultation on this legislation with other parties which are offering sensible solutions to the country's economic situation. Unfortunately, the Government is unwilling to listen to some of the answers that we in Sinn Féin and other parties are putting forward.

The legislation refers to the nominee of the Minister. In this amendment I intend to strengthen the role of the Oireachtas so that the Minister does not appoint the nominee alone, but does so on behalf of the Oireachtas. This will require consultation with, and approval by, the Oireachtas of whatever nominee the Minister appoints to act on his or her behalf in respect of the affairs of this bank.

It is important that this happen because we need Oireachtas oversight. We have seen the monster that the previous Government created in the Health Service Executive, HSE, which is overseen by the Minister but is not accountable to the Oireachtas. My amendment changes the definition of the nominee and places an onus on the Minister to ensure that the nominee is appointed on behalf of the Oireachtas.

This is important in view of the type of bank with which we are dealing. It is in this situation because of its reckless practices, having been in bed with property speculators and developers. Given the love affair this Government and its predecessor had with those ruthless developers who have brought us to this point, it is important that the Minister seeks the approval of the Oireachtas. I ask the Minister of State to support this amendment.

First it was capitalisation, now nationalisation, and we are here again, bailing out this bank. I support this amendment because we need to vet the directors of the bank. It is not good enough for the Minister to say that he will be the one to vet them. There has been an absolutely corrupt culture surrounding senior management, auditors and the financial regulator. These people must be vetted by the Oireachtas Joint Committee on Finance and the Public Service. The Government has been making it up as it goes along and taking fire brigade action in respect of every crisis. This is a good amendment and I fully support it.

Senator Doherty's amendment, as supported by Senator McFadden, provides in effect that the Oireachtas would approve and direct the nominee. By virtue of his or her legal status, the nominee would step into the shoes of, and act on behalf of, the Minister for Finance, who is accountable to the Oireachtas for his actions and the actions of his nominee. However, we do not govern by committee in this country. As the Minister cannot be trammelled in that manner, I cannot accept the Senator's amendment, unfortunately. I have seen no suggestion of corruption in the regulator's actions. It is not a suggestion that could be made without adequate evidence.

I am saddened to hear that the Minister of State will not accept this amendment. When he clarified why he will not do so, he basically said the Government will do the same thing it did with the HSE. This elected Parliament, which may be a partitionist Parliament, met for the first time 90 years ago tomorrow. The First Dáil was democratically elected. Its members were not afraid of accountability — they did not farm out their responsibilities to a body that would not be able to answer the questions of the elected representatives of the people of this State. The Minister of State's response was disappointing. Questions are being asked about the Government's appointees. The reality is that the people have no faith in the Government. Therefore, they will have no faith in its nominees.

It is clear from the banking crisis that the Government has lost the plot. It is engaging in U-turns time and time again. It is making it up as it goes along. If we are leaving it to the Minister for Finance to nominate people to deal with the toxic debt that has been accrued by Anglo Irish Bank, God help us. Every single citizen of the State is in greater debt as a result of the reckless actions of the Government's friends in the property development sector. It is important that the Minister of State rethinks this proposal. That is unlikely to happen, however, which is disappointing.

Perhaps the Minister of State can clarify his remark about corruption and the regulator. I do not understand the connection.

I was simply responding to Senator McFadden's remarks.

On a point of order, I spoke about "a corrupt culture". I said I believed the regulator was not doing his job. I did not necessarily say the regulator was corrupt. I referred to "a corrupt culture".

I wish to develop a specific point. It is clear from the events of recent weeks that the ordinary punter believes that insider networks have emerged. The lack of accountability and regulation is clear for all to see. Fine Gael asked the Minister to include in this Bill a requirement that any new directors of the bank should be vetted by the Oireachtas on a cross-party basis. We have not secured agreement on that. We have also raised questions about the Minister's power to fire any staff member at will. We have pointed out that massive risks could be encountered by bank lending officers who try to recover developer loans. This section of the Bill should address the lack of objective regulation of the insider culture in our banks. We need to hear more than we have already heard from the Government about how it intends to ensure this does not happen again.

Fairly radical change is needed if we are to ensure that the tent in Galway is no longer frequented by an insider network of politicians, developers and bankers. The question of whether the role of directors is in line with company law, as things stand, should be the subject of more discussion in this House. How will directors meet their various obligations in a new culture?

I agree with the principle of Senator Doherty's amendment. It seems to me that accountability and truth are needed. It is sometimes difficult, without probing, to find out what is the truth. Although I had made arrangements, at considerable difficulty, to get here this evening, the imposition of the guillotine that was decided on by the House meant that I was not permitted to speak. I got here in time to hear the Minister for Finance say that all the principal representatives of the Department of Finance, the Financial Regulator and the Central Bank have advised him to take this course of action. That was categorically refuted in a substantial article in today's The Irish Times, which was written by Professor Morgan Kelly, who is a professor of economics in University College Dublin:

At the original crisis meeting on September 29th, Brian Cowen claimed that the blanket guarantee to all six banks was given "on the basis of the advice from those who are competent to so advise the Government". That does not appear to have been the case.

There is a very serious conflict of evidence between what was written today by a senior academic — a professor of economics who claims to have insider knowledge of this matter — and what we are being told in this House. That is why we need this kind of accountability. Professor Kelly's article argues that this Bill will expose the Irish taxpayer — the ordinary person on the street — to the possibility of a considerable loss. It suggests that if we decide not to rescue Anglo Irish Bank, but instead put all our efforts into rescuing the two principal banks, we will save the taxpayer money. Professor Kelly points out that in any case, Anglo Irish Bank is financially guaranteed by international insurance institutions that can take the hit. His article claims that the value of the commercial property involved would have reached approximately zero, but so what? Professor Kelly has reached the conclusion that "an Irish government has coolly looked its citizens in the eye and said: "Sorry, but your priorities are not ours"." Proper accountability is needed for those reasons. Once again, legislation that was presented to the House to deal with a serious matter is being rushed and guillotined. There is no consensus that the Government has taken the correct measures to deal with the issue. The Oireachtas is not being treated with the seriousness it deserves. For those reasons, I am happy to support Senator Doherty's amendment.

I do not propose to accept this amendment. Governments need freedom of action. The issue of decisiveness has been the subject of some discussion recently. The Government needs to be able to take decisions freely. It is accountable to the Oireachtas, but that does not mean all of its decisions have to wait until they have been approved by both Houses. In the autumn, a package that was put together by the outgoing Administration on the other side of the Atlantic was seriously delayed in Congress, which caused serious difficulties. One could go down many different alleyways in reply to Senator Doherty.

I refute the suggestion that this is a partitionist Parliament. Partition was not desired by any party in this Parliament. It was not possible to prevent partition by force. I suspect that all parties in the Dáil, with the exception of Senator Doherty's party, would reject the idea or imputation that people preferred a 26-county state, rather than a 32-county state. I have been to the Galway Races on two or three occasions. The people at every table at which I sat were interested in horses or involved in the equine industry. Rather than talking about property development, they discussed the prospects of the various horses.

(Interruptions).

I do not think Senator Norris was here for the Minister's entire contribution. He can correct me if I am wrong. The Minister has taken strong issue with the article in The Irish Times to which Senator Norris referred. In both Houses, he has emphatically made the argument that the nationalisation of Anglo Irish Bank is a systemic issue. He has argued that the bank is not something that can simply be discarded without consequences. When I attended a meeting of the IMF in Washington I heard a senior spokesman for the American treasury admit that what had caused a great deal of the problems was its decision to let Lehman Brothers fail. We have been determined not to make the same mistake.

Is Senator Doherty pressing his amendment?

It is being pressed. I apologise to the Minister of State for calling this a partitionist Parliament. I have not been in the Dáil Chamber recently and may have missed the 18 chairs set aside for those directly elected by the Irish citizens in the Six Counties who have been facilitated by this Parliament. I apologise to the Minister; it must be an all-Ireland Parliament after all and I withdraw my comments in that respect. This amendment is being pressed.

If the Senator believes in the principle of consent, we need that principle to have an all-Ireland Parliament. I would love to see an all-Ireland Parliament.

The Minister of State's party made a commitment on speaking rights in the Dáil, the all-party committee agreed to that and the Minister of State's party agreed with the all-party committee in that respect, but then withdrew its agreement.

The Senator is straying from the subject of the amendment.

We are here to deal with the banking issue. I would welcome a debate on the other matter another day.

Who raised the question of partition?

Is the amendment agreed? I believe the amendment is lost.

Amendment put.
The Committee divided: Tá, 21; Níl, 29.

  • Bacik, Ivana.
  • Burke, Paddy.
  • Buttimer, Jerry.
  • Coghlan, Paul.
  • Cummins, Maurice.
  • Doherty, Pearse.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Hannigan, Dominic.
  • Healy Eames, Fidelma.
  • Kelly, Alan.
  • McFadden, Nicky.
  • Norris, David.
  • O’Reilly, Joe.
  • Phelan, John Paul.
  • Prendergast, Phil.
  • Quinn, Feargal.
  • Regan, Eugene.
  • Ross, Shane.
  • Ryan, Brendan.
  • Twomey, Liam.

Níl

  • Boyle, Dan.
  • Brady, Martin.
  • Butler, Larry.
  • Callanan, Peter.
  • Callely, Ivor.
  • Cannon, Ciaran.
  • Carty, John.
  • Cassidy, Donie.
  • Corrigan, Maria.
  • Daly, Mark.
  • de Búrca, Déirdre.
  • Ellis, John.
  • Feeney, Geraldine.
  • Glynn, Camillus.
  • Hanafin, John.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • MacSharry, Marc.
  • McDonald, Lisa.
  • Ó Domhnaill, Brian.
  • Ó Murchú, Labhrás.
  • O’Brien, Francis.
  • O’Donovan, Denis.
  • O’Malley, Fiona.
  • O’Sullivan, Ned.
  • Phelan, Kieran.
  • Walsh, Jim.
  • White, Mary M.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Ivana Bacik and Pearse Doherty; Níl, Senators Camillus Glynn and Diarmuid Wilson.
Amendment declared lost.
Section 1 agreed to.
NEW SECTION.

I move amendment No. 2:

In page 6, before section 2, to insert the following new section:

2.—(1) The Minister may, and shall if required to do so pursuant to a resolution under this section passed by both Houses of the Oireachtas, apply to the High Court for an order under the Companies Acts for the appointment of one or more inspectors to investigate the affairs of Anglo Irish Bank, having regard in particular to the questions as to whether:

(a) its affairs have been conducted with intent to defraud its creditors or the creditors of any other person or otherwise for a fraudulent or unlawful purpose or in an unlawful manner or in a manner which is unfairly prejudicial to some part of its members, or that any actual or proposed act or omission of the company (including an act or omission on its behalf) was so prejudicial;

(b) persons connected with the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members;

(c) that its members have not been given all the information relating to its affairs which they might reasonably expect; or

(d ) such additional grounds as the Minister specifies in his or her application to the High Court.

(2) For the purposes of subsection (1), the Minister has all such powers as are necessary to enable him or her to apply to the High Court for an order of the kind referred to in that subsection and the High Court shall hear and determine that application as if the Company Law Enforcement Act 2001, in respect of applications concerning Anglo Irish Bank, vested those powers concurrently in the Minister and in the Director of Corporate Enforcement, so as to be capable of being exercised by either of them.

(3) Notwithstanding subsection (1), the Minister is not required to make an application under that subsection if he notifies both Houses of the Oireachtas that the Director of Corporate Enforcement has applied to the High Court for an order under the Companies Acts for the appointment of one or more inspectors to investigate the affairs of Anglo Irish Bank.”.

The Labour Party believes this amendment is essential. It aims that the Bill should provide for the appointment of an inspector to investigate what has gone on in Anglo Irish Bank. The methodology we propose is that the Minister should apply to the High Court for an order under the Companies Act for the appointment of one or more inspectors to investigate what has happened in this bank.

An inspector should specifically investigate the bank's affairs and how they have been conducted, examine whether the bank has tried to defraud its own creditors or its own members, examine whether persons connected with the management of affairs have been in any way guilty of fraud and whether members of the bank have been given enough information. The amendment would also provide other ministerial powers to make enforcements and directions in respect of an investigation.

It is critical that this amendment be supported. If, as in all likelihood, this Bill is passed tonight, this bank becomes ours tomorrow. Then we must start singing its praises. We must try to ensure that we get the bank to a level we want and we must take that responsibility seriously. We must do so, confident that we will get to the bottom of how it was we arrived here in the first place. Unless this amendment is passed, I do not believe many people will feel confident we will be able to do that.

The amendment specifically aims to arrive at the facts, namely, what is on the loan book, what types of loans there are, whether it is possible they will be paid back and how much toxic debt there is. It aims to find out who did what, particularly with regard to a particular investment strategy in the bank and how it was managed — I believe we all know what we are talking about — and how contracts for difference were conducted.

There are questions about the way the chairman concealed loans in the bank. There are further questions about the way share dealing was conducted in and around the time of the recapitalisation and bail out plan. In addition, we must find out how we got to this position and who made the critical decisions. We must examine the role of the auditor. We can learn from our past here because we have previous experience of occasions when auditors simply did not do their job.

The amendment aims to clean out the bank of those who are running it, if that is necessary. Most of all, it aims to ensure there is transparency with regard to the actions before us today in the Houses, in respect of this Bill. It aims to bring that transparency to the conduct of this bank in the recent past. If the bank is to be nationalised people will then know how we got here and will know that lessons can be learned for the future.

I agree with every word said by my distinguished colleague on the Labour bench, Senator Kelly. I would like to go a little further. Within the last hour the Minister for Finance, Deputy Lenihan, told the House that the Director of Corporate Enforcement did not have the same powers to inquire into banks that he would have with regard to other institutions. That is rather worrying.

He did not say——

That is exactly what he said. I heard him. I was in the House. I heard every word.

It is the regulator. We heard that.

He does not have the same powers.

We need somebody to go in there who has those powers. It seems to be an extraordinary situation. Reference was made to the position of the chairman whom I have met, and who is a charming man, but a man with an extraordinary attitude towards life. He was able to take out loans that were concealed which varied between €80 million and €100 million. These were neatly swiped off the books every year with the co-operation of other financial institutions. He was in the newspapers shortly after I interviewed him on a radio programme to say he thought that old age pensioners should be means tested for the medical card because the country was living beyond its means. He was certainly living beyond the country's means.

What happens to the loan advanced by this bank to its own chairman? As we nationalise the bank, we are presumably undertaking responsibility for those loans. Does that mean this gentleman has his €80 million-plus loan secured by the taxpayer? That would be extraordinary, which is why I want the Minister to be aware of this question. It is one in which the taxpayer would be most interested.

The Minister also indicated he was not aware whether any criminality had occurred. Again, that may be part of his judicious approach to the whole issue. On a different Bill in the past year, an amendment was defeated which sought to protect citizens of this State from going to jail for not paying television licences. Yet, somebody can apparently swindle their way to €100 million and there is no question of that person going to jail. The ordinary citizen would be very interested to know whether any criminality is involved in this. If the officials who are principally charged with this area do not have sufficient powers, those powers should be conferred, and perhaps they should be conferred within this Bill, as Senator Kelly has suggested and which would be highly appropriate. This is probably the most significant amendment we are likely to reach today.

I could go on but I know time is limited. There is a guillotine and it would be very unfair of me to expatiate too much at this stage. However, this is a highly important amendment and I will certainly support it.

I also support the amendment. It is an excellent idea that this sort of measure would be adopted. We have all agreed, on both sides of the House given the speeches I have heard in the debate, that accountability is key and that those at the top of Anglo Irish Bank responsible for effectively poisoning the entire banking sector in the State should be held accountable.

Issues of criminal law unquestionably arise and I was glad to see weekend reports that the fraud squad is investigating. However, what we heard tonight from the Minister is that it was not up to him whether investigations were carried out by the Director of Corporate Enforcement or by the Director of Public Prosecutions and so on, about which he is correct. This is where the amendment fills a gap. The problem is that the Minister has effectively dismissed the idea that he should take action to restore confidence in the integrity and accountability of our bankers, or that he should have any role in this regard. What the amendment clearly does is give the Minister and the Oireachtas a role in appointing an inspector to investigate whether affairs have been conducted with intent to defraud, in other words, whether fraud has been carried out, and therefore to render much more transparent the dealings of the bankers at the top of our banking system. This is the sort of move that is required of the Minister and the Oireachtas to restore confidence in the banking system.

Many of the problems with Anglo Irish Bank in recent days, which were apparently the reason for the legislation itself, arose because many people were no longer willing to be associated with a bank that had become so closely identified with malpractice, and they were withdrawing money due to a lack of confidence and trust in the bank. That is key to this problem.

Many at the weekend were comparing Anglo Irish Bank to Ireland's Enron. Again, there is an issue in this regard. If this is our Enron, then just as people were held accountable for what happened in the United States, so people should be held accountable here for what has happened with Anglo Irish Bank.

The Minister of State spoke about being at the Galway races among people with an interest in horses. There is an element in this debate where we are effectively looking to close the stable door after the horses have bolted — given the Minister's interest in horses, he may have an interest in that analogy. On a more serious level, it is very important to seek to restore confidence, which is key. The run on Anglo Irish Bank and the withdrawal of their money by depositors was due to a lack of confidence and the desire not to be associated with malpractice.

We need to restore confidence from the top. The fraud squad, the Director of Corporate Enforcement and the DPP should investigate, but this is a way in which we in the Legislature, and the Ministers in the Cabinet, can be seen to be acting to restore confidence in the banking sector from the top by ensuring greater transparency and accountability. I urge the Minister of State to accept the amendment.

I understand the motivation for the amendment. When added to all the other legislation that has been put in place, it may be a top-heavy procedure to deal with what should be fairly straightforward questions at this time. The reality is that the Minister failed to carry out any due diligence of the banks before he provided the State guarantee. He failed to carry out any due diligence before he put forward his proposals on capitalisation. It seems now that no due diligence has been carried out before the nationalisation of this bank. We are not getting anything like the full picture in regard to the financial state and value of the assets which the Minister has now taken on board on behalf of the taxpayers of this country. I understand perfectly from where the motivation for this amendment comes.

The Minister said tonight he had used the term "disappointing" back in September when it was revealed by Anglo Irish Bank that its then chairman had these extraordinary loans and other directors had significant loans. He said he used the term because he did not want his statements to have any effect on the market. I find that very disingenuous. It is a post hoc rationalisation of a flawed statement given that the markets judged his inaction as very detrimental to the banking system, and neither the Minister, the Government, the Financial Regulator nor the directors of the bank could see the difference between right and wrong.

The letter from Anglo Irish Bank announcing resignations on 19 December stated that the transfer of loans did not breach banking or legal regulations. I question the signal that went out when no action was taken and no significant statement was made by the Minister condemning this, expressing serious disapproval or stating that the full armoury of the law would be brought to bear. Now, when he announces the nationalisation, the entire blame for the financial and banking catastrophe is laid at the door of one man when, in fact, it is due to the complacency of the Minister and the Government in the entire sequence of events which has taken place in the past number of months.

What is the security in respect of these loans to directors and senior staff in Anglo Irish Bank? Are they secured on reliable assets? Is there evidence of the recipients of those loans having incurred serious losses to date? Is there any evidence of the recipients of these loans absconding from the jurisdiction to avoid meeting their liabilities? What are the implications of these specific loans for the taxpayer? If the Minister could answer even that question, we might have a little more confidence in his decisions and in the legislation he is putting before the House.

I support this amendment, but I deeply regret that it is necessary. One of the problems is that it should not be necessary to have an investigator. However, it is necessary because we are not being told anything about what has been occurring. To a large extent, this debate is taking place in a vacuum. People are outraged at the result but they do not know why it has occurred. Today in the House, the Minister of State, Deputy Mansergh, made a speech, but he did not give us any good reason why the Minister changed his mind. Ten days before this decision was made the Minister for Finance gave an interview to The Irish Times in which he stated that the option of nationalisation was out. Now nationalisation is in and apparently it was always on the cards. However, there must have been a specific reason why the Government changed its mind in that period, but we do not know and we are not being told.

I agree with Senator Bacik that many questions put have not been answered. The only way to get the answers is through an investigator. I presume the Office of the Director of Corporate Enforcement need not publically reveal its findings. Will the Minister explain the position to the House? The Finance Regulator is investigating this matter. Will those findings be made public or will they be hidden behind closed doors like everything else in this episode? This whole tragic episode has been marked and coloured by the fact that neither the Oireachtas nor the taxpayer, nor the owners of Anglo Irish Bank have at any stage been told what is happening. Regrettably, the only way to get to the bottom of this is to have an investigator publicly explain the true extent of the debt and the truth about solvency.

I note that when Government spokesmen talk about solvency they say it is solvent at the moment. However, then they say there is a potential insolvency down the road, which is a very subjective way of discussing what is occurring. Presumably they reckon it will be bankrupt tomorrow, but it is not bankrupt today. An investigator could explain to us the assumptions on which judgments of that sort are made. It is disturbing and I do not blame people for making what the Taoiseach brands as irresponsible statements. However, it is disturbing when we are not told what is happening. It can only inflame the views of those who are accused of being irresponsible. I believe it is correct and if we are to have confidence in this bank we must be transparent and we must know the facts. At present we are fuelling suspicions by refusing to tell anyone anything about what is happening, by putting up people at the emergency general meeting of the bank to stonewall questions rather than reveal what is there, and to constantly put up the defence that there are commercial sensitivities. There can no longer be commercial sensitivities concerning Anglo Irish Bank. This is a basket case which no longer suffers from the normal rules of commerce. It is in the public interest to tell us what has happened and to do so quickly.

Senator Ross is correct and sums up the reason why we need the appointment of inspectors as outlined in the amendment. Senator Bacik referred to Enron and said this could be Ireland's Enron. There is no doubt this is probably the most expensive economic mistake that has ever occurred in the country. It is ludicrous to pass this Bill without providing for the appointment of some investigators to see how we got into this situation. It is not difficult or expensive to make such a provision and it should be carried out as part of due process. I do not believe the Minister of State or the Minister for Finance know exactly why the bank is in this situation. We must learn lessons. There has been a breakdown in procedures and there are questions about whether due process has been carried out by the management of the bank. We do not know what has occurred and no one can provide reasons or answer why the bank is in this situation.

We are asking the people to put up a good deal of money to purchase the bank. It is important that others pay for the mistakes they have made. If fraud was committed it would be uncovered by an investigation and steps could be taken to ensure the perpetrators were brought to justice. This is what they and the Irish people, if it is to bail out this bank, deserve. We need due process and we must ensure those who have committed fraud are brought to account. Until we do that it will be very difficult to get confidence back in the Irish banking system. For these reasons and the reasons outlined by my colleagues I urge the Minister to accept the amendment.

I did not get a chance to speak on Second Stage and I wish to raise some questions. They relate specifically to the amendment proposed by the Labour Party. I refer to earlier comments by Senators Regan and Ross. Will the Minister outline to the House what actions are being taken against the directors of the other financial institution involved with the private loans of the chairman and the directors of Anglo Irish Bank? I received many requests from people interested to know if any action is being taken against the management, the board and the directors of that organisation, namely, Irish Nationwide. Will the Minister inform the House of the position in that regard?

The nationalisation of Anglo Irish Bank possibly exposes the taxpayer to a very significant liability. It could be €30 billion or a good deal more and the Cathaoirleach's guess is as good as mine. There has been a good deal of comment recently in the media on this matter and there was a very interesting article in The Irish Times today by Professor Morgan Kelly. He spoke of the possibility of debt being incurred of up to €20,000 per household. I realise the Taoiseach’s view is such claims amount to scaremongering, but these are legitimate fears for the Opposition to raise. Those fears have not been addressed by the Minister for Finance, the Minister of State at the Department of Finance or anyone else who has spoken on the matter. More questions than answers arise from the proposed legislation. Will the Minister shed some light on these issues?

Many questions have been thrown up and I support all the speakers including Senator Regan and others who have highlighted this issue. The Minister must answer these questions. There is concern on the Opposition side of the House. Does the Minister believe the bank is insolvent at present, or could it survive on its own? Is there an element of being reckless with taxpayers' money with this legislation? That is the thinking on this side of the House. Nothing the Minister has said tonight has convinced us otherwise. When people call for an investigation of this sort, it is because no one is providing straight answers to many simple questions put regarding the Anglo Irish Bank debacle. The footloose and fancy free attitude shown towards the law and ethics by the board and members of Anglo Irish Bank is one thing. However, the dismissal of our concerns by the Government and refusing to take on board the views of the Oireachtas is worse. There must be an inquiry, otherwise the stain will stay on Ministers and the impression that they are somehow complicit in what is happening will remain long afterwards.

That comment is unworthy of the Senator. I fully agree with many Senators who have stated that confidence, accountability, proper investigation and pursuit of breaches is needed. However, the Senator's proposed amendment is not necessary in light of the extensive legal powers available to the statutorily independent Office of the Director of Corporate Enforcement.

The Minister for Finance, Deputy Brian Lenihan, said quite the opposite.

I am confident the director will conduct a thorough examination of the unacceptable governance practices that have come to light in Anglo Irish Bank which rightly have caused such grave public concern. The Minister highlighted these matters in his statement announcing that Anglo Irish Bank was being taken into public ownership. In recent years the director and his staff have shown a strong commitment to their compliance remit and bringing parties who have not met their legal obligations before the courts in appropriate circumstances. The office has secured in the courts the conviction of more than 140 companies, directors and other persons for company law offences. It also has directly had imposed disqualification orders on more than 70 persons, while approximately 800 directors have been restricted by liquidators following reports made to the director's office. I, therefore, suggest the House can have confidence that the director and his staff will undertake a thoroughly professional job in examining recent events in Anglo Irish Bank. I look forward to seeing the results of that examination in due course and in accordance with due process.

The Minister has stated, possibly in the other House, that persons or directors who have taken out loans will be fully answerable in respect of paying back those loans. However, he does not have the personal power to direct either the Office of the Director of Corporate Enforcement or the Criminal Assets Bureau. Although Senator Bacik may have suggested otherwise — if I misunderstood her, she will correct me — there was no run on Anglo Irish Bank. The Minister explained in extenso in the other House and in the speech that I——

On a point of order, I did suggest there may have been a run on the bank. It is one of the matters about which there has been speculation——

That is not a point of order.

——and Members have received no clear information one way or the other. Consequently, I would like an answer.

I am stating authoritatively that there was no run on Anglo Irish Bank.

The decision the Minister took to nationalise Anglo Irish Bank followed consultation with the Central Bank, the Financial Regulator and the NTMA. The Government believed the recent corporate governance issues at Anglo Irish Bank had caused serious reputational damage to the bank at a time when market conditions were deteriorating for it, thus adding to funding pressures. Despite the Government's efforts to reassure the market by pledging capital support to the bank, the negative market sentiment towards it has continued. In the circumstances, the Government has decided it is appropriate to take action to nationalise the bank.

On a point of order, I seek an answer to my question on that issue.

I am about to answer it, if the Senator allows me to finish.

That is not a point of order.

The Minister has addressed also the issue of what effect this will have on the public finances. This evening I repeated something the Minister had stated in the Dáil:

Taking Anglo Irish Bank into State ownership should have no immediate impact on either the general Government debt or the current deficit as Anglo Irish Bank is a going concern and will continue to operate as a commercial bank. As with other commercial State companies, its debts and assets will remain on its own books.

That is not the question I asked the Minister of State.

I call Senator Norris.

The question I asked——

I will facilitate Senator Twomey later.

The Minister of State's reply is astonishing because he has stated the Director of Corporate Enforcement has perfectly adequate powers. Within the past hour or so the senior Minister informed the House that the Director of Corporate Enforcement did not have sufficient powers.

He was talking about his own powers as Minister.

He suggested there was a gap in respect of the question of authority, power and capacity to investigate. At least that is what I understood him to say.

That is correct.

For that reason Members require a clear explanation of what is, on the surface at least, a clear contradiction between what a Minister and his Minister of State have said. The Minister of State has noted that the Minister does not have the power to direct the Office of the Director of Corporate Enforcement and so on. For these reasons and because of such clear gaps Members need precisely the investigation proposed. One must remember the people are footing the bill. Ordinary people are paying for this casino that paraded itself as a bank. The Minister of State has stated authoritatively but without giving Members substantial supporting evidence that there was no run on the bank. If that is so, why did I hear of it on the radio while abroad? It certainly appears to have been given wide currency internationally that there was a run on the bank. If there was no run on it, what is the precise reason for the nationalisation? Senator Ross also asked this question which is extremely pertinent.

I gave the answer to that question.

Not really, or at least the Minister of State did not give an answer that satisfied me. Moreover, I doubt whether it satisfied many other Members because clearly something has changed. I also support Senator Ross in stating proper information is required. If an investigation takes place, it must be made public because such accountability is required. I find it embarrassing to be obliged to agree with my colleague on so many points——

Senator Norris, a number of other Members wish to contribute.

If I may, I will conclude on these two points.

It is far worse for me.

To be praised by me. That is the reason I am doing it.

While the matter of commercial sensitivity was raised, it does not apply in this regard because it is just like the position in a libel action in which people have no reputation left. The bank has no credibility and no reputation remains to it. Consequently, it cannot be subject to the ordinary forces of commercial sensitivity. The Minister has stated it is a going concern. While that may be the case, within limited terms of linguistic reference, the question is: where is it going and at what cost?

I wish to follow on from the Minister of State's comment that there was no run on the bank. However, in answer to the question as to why the bank should be nationalised, he stated: "Market confidence in the bank was further eroded and this was reflected in a limited weakening of Anglo Irish Bank's funding base in recent weeks and the increased risk of knock-on effects on its credit ratings." My understanding of that comment is that there was a run on the bank.

The Minister of State should clarify exactly what the words, "a limited weakening of Anglo Irish Bank's funding base" mean. Although it is not clear, this is the clearest explanation that has been given as to the reason Members are being asked to nationalise a bank that they were told 25 days ago would not require nationalisation.

I will repeat my question which is the only one I will ask the Minister of State. If this legislation is not passed tonight, will Anglo Irish Bank be insolvent or will it be solvent and free to trade? Does the Government consider that it will survive or are Members proceeding with the Bill because the Government considers it to be insolvent and that it will not survive?

The Taoiseach asked all Members to behave responsibly and that is what they are doing by tabling this amendment.

Were Members to ask certain questions or make statements in a a certain manner, they might be giving oxygen to the Taoiseach's concerns. However, they are not doing so, even though they do not have the requisite information to make an honest assessment of the Bill. We are seeking to insert a clause that will ensure the taxpayer can be confident that everything that needs to be dug out will be dug out. That is why this provision is being tabled. The Minister is taking a leap of faith with the Irish people but this provision will handcuff him to them to ensure he digs up everything that is necessary.

My colleagues are correct in stating we should not have to move this amendment if the provision was in the Bill but the Bill is not strong enough without it. It does not provide enough transparency on the activities that have gone on, which I will not repeat ad nauseam because everybody, down even to ten year olds, is aware of what has gone on in Anglo Irish Bank.

The Government should think clearly before it renounces this amendment. The hope and confidence that it is trying to build for the banks depends on the level of information coming out so that intelligent people can make a critical analysis that they trust what it is doing and it is right. Currently they are on a pendulum and they must decide whether they trust the Government or not. This will help the Minister of State to gain their trust. If he neglects it, they will think otherwise.

I want to make a simple point in agreement with Senator Norris. The Minister for Finance, Deputy Brian Lenihan, was in here approximately an hour and 15 minutes ago and he stated quite categorically, contrary to what the Minister of State, Deputy Mansergh, stated, that the powers of the Office of Corporate Enforcement were not the same when it came to banking. Despite the Minister of State's statement, that is the reason we need this amendment in order to ensure that those necessary powers and provisions are there to get the information, to weed out those who did wrong and to ensure that steps are taken that it will never happen again. I ask the Minister of State to support this.

The Minister of State has said that there was a reputational effect of the disclosures about directors' loans, and particularly the activities of Mr. Seán FitzPatrick, the loans which he secured and the manner in which they were transferred prior to auditing of the accounts. The question is how did that reputational effect manifest itself if not in a run on the bank. If the Minister of State could be clear on this point, which has been asked in different ways by a number of Senators, we could be clear and perhaps understand what the Minister is about.

The Minister, in his written statement, makes very clear his view that Bank of Ireland and Allied Irish Banks are fundamentally sound and solvent institutions. He does not say the same about Anglo Irish Bank. The question which then arises is what changed between the disclosures on 19 December last and one month later, when the Minister decided that recapitalisation was inadequate and that nationalisation was required.

The Minister of State did not respond to my other question on the extent to which directors' loans are secured by reliable assets. Perhaps there is no answer and the Minister of State has no facts and figures about this, which again would suggest that the Minister does not know the true state of affairs within Anglo Irish Bank. I would ask the Minister of State to respond to those two questions.

There seems to be complete confusion between what the Minister of State, Deputy Mansergh, is saying and what the Minister, Deputy Brian Lenihan, stated.

I will clarify it. Senator Fitzgerald need not worry.

Good. The Minister of State stated, "Anglo Irish Bank will be managed on a commercial basis at arm's length from the Government" and a new board will be appointed. I ask him to clarify how exactly the investigation will be done into what has gone wrong and how the lessons can be learnt. Can he clarify the role of the regulatory authority, which the Minister speaks about, as opposed to the Director of Corporate Enforcement? The Minister for Finance is saying one thing and the Minister of State is saying another.

I did not get a chance, because of time constraints on Second Stage, to put on record that this, the third largest bank in the country, has been responsible for the employment of tens of thousands of people over the past ten or 12 years. Looking back on the ICC Bank and the ACC Bank, my question to the Minister of State is does this now mean that the assistance of small and medium sized businesses, private and family owned, will be the priority of the new bank from tomorrow morning? They are the businesses that ACC Bank and ICC Bank kept going in the 1970s and 1980s when there also were massive downturns in the economy, the difference on this occasion being that it is global. It appears everywhere is in the same difficulty, in the UK and the United States or anywhere where our young people had to emigrate to in the 1970s and 1980s. If that is the case, I wish the new bank well. We will have a friend that will be able to assist all those entrepreneurs who brought hundreds and thousands of jobs, particularly to rural areas, employing Irish people with Irish raw materials. Those achievements stand and can be expanded once we get over this global downturn.

The Minister for Finance, when he was speaking, stated that the Director of Corporate Enforcement is being assisted by the Financial Regulator who has particular powers to obtain information from financial institutions. I repeat the fact that there was no run on the bank and also, if one wishes to put it another way, that it was not insolvent. However, limited funding problems and the risk from ratings downgrades, added to corporate governance difficulties, led to a loss of confidence and to nationalisation.

I do not think Senators would want to suggest that the Government should always wait until the last possible moment before taking action. There are many appeals for leadership and decisiveness and for the Government to be ahead of the game. Senators attempted to argue that the Government should only have nationalised when it was forced to do so. I do not accept that argument.

The banks are vital to the operation of this economy, and particularly to the small and medium sized enterprises to which Senator Cassidy referred. We all have become much more conscious of this and perhaps we tended to take banks more for granted up to a few months ago. I do not believe assistance to small and medium sized enterprise is something that can be confined to one bank. It must be the function of all banks and for better or worse as a result of the situation, the Government has become much more involved in the banking sector.

I suppose I would not be the only person rubbing my eyes, notwithstanding any youthful socialist tendencies that I might have had, that I would be here presenting, on Second Stage, a Bill for the nationalisation of a bank. On the other hand, another semi-childhood or certainly juvenile impression I had was that banks were pillars of rectitude and respectability, possibly a bit too conservative for the good of society but with no problems on ethical fronts. Unfortunately, however, like so many other institutions that had unquestioning respect 30, 40 or 50 years ago, that was not always right, perhaps. What has happened is very sad. It is sad not just in terms of a fall in standards, but in terms of its consequences for the welfare of our people.

There is always in these situations a thirst for what one might call instant justice. In the French Revolution, which I studied, financiers tended to end up at the end of lampposts. There must be a process. If one is asking whether the Government knows everything there is to be known about Anglo Irish Bank, the answer——

Does he know anything?

——is, of course, "No". We have an independent Director of Corporate Enforcement to investigate events in detail. Senators should not assume——

Did the Minister ask for a report or did he even read it?

The Minister of State without interruption.

If they want an enforcement process, we must allow it to take effect instead of doing what the Queen of Hearts did, namely, sentence first and hear the evidence afterwards.

We have never seen the evidence. It has never been published.

What of Deputy Bertie Ahern's comments?

The Senators had their chance to speak. The Minister of State without interruption.

I will not accept the amendment. We have complete confidence that the Director of Corporate Enforcement will pursue these issues of grave concern and deep and legitimate public interest. As legislators, we should not try to duplicate our effective and efficient machinery. We cannot afford to do so.

It does not work.

After the Minister of State's bewildering statement, I will press the amendment.

Amendment put.
The Committee divided: Tá, 22; Níl, 28.

  • Bacik, Ivana.
  • Bradford, Paul.
  • Burke, Paddy.
  • Buttimer, Jerry.
  • Coghlan, Paul.
  • Cummins, Maurice.
  • Doherty, Pearse.
  • Donohoe, Paschal.
  • Fitzgerald, Frances.
  • Hannigan, Dominic.
  • Healy Eames, Fidelma.
  • Kelly, Alan.
  • McFadden, Nicky.
  • Norris, David.
  • O’Reilly, Joe.
  • Phelan, John Paul.
  • Prendergast, Phil.
  • Quinn, Feargal.
  • Regan, Eugene.
  • Ross, Shane.
  • Ryan, Brendan.
  • Twomey, Liam.

Níl

  • Boyle, Dan.
  • Brady, Martin.
  • Butler, Larry.
  • Callanan, Peter.
  • Callely, Ivor.
  • Cannon, Ciaran.
  • Carty, John.
  • Cassidy, Donie.
  • Corrigan, Maria.
  • Daly, Mark.
  • de Búrca, Déirdre.
  • Ellis, John.
  • Feeney, Geraldine.
  • Glynn, Camillus.
  • Hanafin, John.
  • Keaveney, Cecilia.
  • Leyden, Terry.
  • MacSharry, Marc.
  • Ó Domhnaill, Brian.
  • Ó Murchú, Labhrás.
  • O’Brien, Francis.
  • O’Donovan, Denis.
  • O’Malley, Fiona.
  • O’Sullivan, Ned.
  • Phelan, Kieran.
  • Walsh, Jim.
  • White, Mary M.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Dominic Hannigan and Alan Kelly; Níl, Senators Camillus Glynn and Diarmuid Wilson.
Amendment declared lost.

As it is now 11 p.m., I am required to put the following question in accordance with an order of the Seanad of this day: "That in respect of——

On a point of order——

I am putting the question.

On a point of order——

On a point of order, we have dealt with only two of the 20 amendments tabled. This is unbelievable.

I am putting the question, "That, in respect of each of the sections undisposed of, the section is hereby agreed to in Committee, the Schedule and Title are hereby agreed to in Committee, the Bill is, accordingly, reported to the House without amendment, Fourth Stage is hereby completed, the Bill is hereby received for consideration and the Bill is hereby passed." Is that agreed?

It is agreed.

The Green Party is rolling over again for Fianna Fáil.

Without a proper discussion of our amendments, it is impossible to agree——

(Interruptions).

Of the 20 amendments tabled——

(Interruptions).

——only two have been discussed. It is an absolute disgrace.

(Interruptions).

Senators

Vótáil.

It was agreed.

It is not agreed. It is disgraceful.

It is agreed.

There are 20 amendments to the Bill and only two of them have been discussed. It is an outrage.

I call on the Leader to move No. 2, earlier signature motion.

Barr
Roinn