Houses of the Oireachtas

All parliamentary debates are now being published on our new website. The publication of debates on this website will cease in December 2018.

Go to oireachtas.ie

Private Notice Questions. - Banking Fraud.

Wednesday, 6 February 2002

Dáil Éireann Debate
Vol. 547 No. 4

First Page Previous Page Page of 183 Next Page Last Page

Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell asked the Minister for Finance if, in view of the disclosure of serious fraud in a US subsidiary of AIB and the implications for shareholders and pension funds in this country, he intends to ask the Irish regulatory authorities to conduct an investigation into the affair; and if he will make a statement on the matter.

Mr. McGrath: Information on Paul McGrath Zoom on Paul McGrath asked the Minister for Finance if he will make a statement on the actions proposed by his Department and the Central Bank regarding the latest events involving the Allied Irish Bank group.

Mr. Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps she proposes to take to minimise adverse con[1481] sequences for Irish commerce arising from the major banking fraud in a US subsidiary of AIB.

Minister for Finance (Mr. McCreevy): Information on Charlie McCreevy Zoom on Charlie McCreevy The primary responsibility for managing a bank and preventing fraud lies with the management of that institution. No regulatory authority can put in place a supervisory regime to ensure that a financial institution can never be a victim of fraudulent activity from within. It is important to keep in mind that the bank in which the difficulty has arisen is located in the USA. As such, it is regulated by the Federal Reserve and local regulators. As part of the AIB Group, it is of course also regulated on a consolidated basis by the Central Bank of Ireland. The Central Bank has been in contact with its US counterparts and with AIB about the events in question. When the full facts of the matter have been established the Central Bank will take any necessary action. I have spoken to the governor of the Central Bank, Maurice O'Connell, about the matter and my Department has also been in contact with the Central Bank.

I am also advised that AIB's capital position is strong and is comfortably within established limits. There is no threat to account holders or to the solvency of the bank. From the point of view of Irish consumers and the Irish financial system in general, this is crucial. Although AIB Group has suffered a considerable blow to its financial position, this blow must be seen in the context of the overall strength of the institution. Even taking into consideration the effects of this event, the bank concerned remains well capitalised, solvent and active in the market. This is not, therefore, a disastrous situation from the point of view of Irish financial markets, but it is a reminder to the management of the bank, of other banks and to regulators and legislators of the importance of ensuring financial institutions are well-capitalised and that their internal systems are up to the job of managing and controlling the increasingly complex nature of the financial markets and financial instruments with which they deal.

There may also be lessons for legislators, and these should be digested and acted upon. I have asked the Central Bank to report to me, in the light of these events and their own investigations, on whether any changes to the legislative provisions governing banking supervision might be required. It is, of course, a matter of regret that the share price has fallen this morning and that therefore investors in AIB, both individuals and institutions, have suffered a loss. Obviously, to the extent that the bank loses, the value of the bank must be affected and some loss was inevitable under the circumstances. I hope that the market will have due regard to the fundamental soundness of the bank's capital base and reflect this in a fair view of its ongoing prospects. I understand that notwithstanding these events, the Bank will record a comfortable profitable position for the financial year 2001.

[1482]Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell Does the Minister agree that it is astonishing that the actions, apparently, of just one man could lead to a loss of such extraordinary proportions for a bank such as AIB and its American subsidiary? A loss of some €860 million or $750 million was experienced. Does he agree, even more importantly, that this demonstrates very clearly that what he refers to in his statement as the regulatory environment is clearly not up to the job and that the fact that a fraud of this kind apparently went undetected for up to one year is an astonishing indictment, not just of the practices within AIB and its subsidiary but also of the regulatory authorities which failed to spot it?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy I am relying on information supplied to me by the governor of the Central Bank and I heard most of the press conference of the chief executive of AIB Group this morning. The Deputy asked whether I was amazed at the extent of the loss and amazed that this could have happened under the noses of the management and the regulators. The best way of dealing with this is to paraphrase what the chief executive said this morning: if there are two people in collusion, the best systems in the world will find difficulty in tracking them down. Questions are certainly raised about the effectiveness of the management systems within the group that such a loss could go undetected for some time. I understand that the Federal Reserve, which is quite diligent in its application, gave the bank an absolutely clean bill of health in the middle of last year.

As I understand from the press conference, the complex nature of the fraud made it very difficult for the bank's management to get to grips with it. As I said in my statement, questions have been raised regarding the regulatory environment, but there is no system that will ever be devised or has ever been from the time of Adam and Eve to the present, that is able to guard against people deciding to collude and defraud someone else. The best system in the world will not be able to uncover it. However, the regulatory systems and internal controls should be efficient and tap into change at an early date. This fraud was quite complex. The news only came to the AIB headquarters in Dublin on Monday of this week and the appropriate action was taken then.

Mr. McGrath: Information on Paul McGrath Zoom on Paul McGrath Noting the size of the deficit now reported by Allfirst, the subsidiary of AIB in the USA, and the manner in which it has come to light, does the Minister agree that serious questions are raised about both the internal and external auditing systems within AIB Group? Certainly there are serious questions about what has happened, what has gone wrong and why it was not picked up. It is not surprising because only a short time ago their internal and external auditing system did not pick up the difficulties with DIRT. Back in the 1980s there were further problems within AIB Group that were not noticed and the State had to come to the rescue. The questions [1483] about the internal and external auditing systems themselves raise questions about the regulatory system and controls, operating via the Central Bank, that regulate financial institutions here. Does the Minister agree that we need to take a serious look at what is happening and probably strengthen the existing controls within the framework of the Central Bank?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy I will answer the three specific points raised by the Deputy in the second part of my intervention. Over the past number of years there has been debate in this House and outside on the proper mix between what I would call prudential regulation or supervision and customer matters. There was considerable debate about this leading to the new Bill, which it is hoped I will soon be in a position to publish, regarding the Central Bank Act, 1998 and the new financial services regulatory authority. The debate really boils down to prudential supervision, including stringent safeguards, versus consumer matters. I am and have been unashamedly of the view – this will be no surprise to Deputy McDowell as he has heard this before – that the prudential supervision and regulation is of far greater importance in the overall scheme of things. A person is more concerned when he goes into a bank that his money is there for him rather than that the fellow behind the counter is dressed properly or says “Hello” properly on the telephone or whether he has done certain small things to the person's account. A fair way of putting it is that people are mainly concerned about the prudential regulation of financial institutions. In that regard the Central Bank of Ireland has a better record than anywhere else in Europe; I do not know about the USA.

With the growth of complexity in financial products and engineered financial products, it is becoming increasingly difficult for the supervisory authorities and the management of institutions to keep ahead of the posse. It has struck me over the past number of years that some very junior people down the line are so brilliant at their jobs that the people who are paid three or four times their salary are not as au fait with the details of all the engineered products and complexities as the people who are dealing with them.

Mr. McGrath: Information on Paul McGrath Zoom on Paul McGrath What is the Minister saying?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy Deputy McDowell, Deputy Noonan and I have had a debate for some time about the proper way for the Central Bank legislation to proceed. As a result of the NIB matter, which was a consumer issue rather than a prudential regulatory one, more people came down on the side of consumer issues in the general debate. It is important that the framework we put in place for the new Bill does not lessen the importance of prudential supervision, because, as I explained earlier, that is more important in the scale of things. The Central Bank of Ireland financial ser[1484] vices regulatory authority Bill, as it has now become known, should be published in the near future. It has been striking that that debate has been ongoing for more than the past three years between me, my colleagues in Government, the Central Bank and the Department of Finance. Fine Gael took one view and the Labour Party took another as to how it should go. I am pointing that out now in the context of what has happened in AIB. The bottom line when it comes to financial regulations, is that there is no danger or risk to the institutions. In that regard the Central Bank has a great record. This incident is primarily the responsibility of the Federal Reserve of the United States and local regulators there. The Federal Reserve has an excellent record as well. At one remove the Central Bank will be looking at the overall AIB group.

The overall hit to AIB is a blow to its earnings for 2001. I understand the bank decided, for accounting reasons, to take a hit in the 2001 profits thereby reducing them but it will be a one-off hit on its balance sheet. The overall reserve of the AIB group in 2002 is totally different than it was in the mid-1980s when its previous administration was faced with the problem regarding the ICI collapse. We can have different viewpoints as to how that deal was entered into and whether the State could have made a better deal. I readily appreciate the difficulties when a case like that is presented to the Government. It was to have such a severe effect on the group that immediate action had to be taken. If we were doing it again I am sure we would have worked out a better deal but at the time it was the first big hit to the Irish financial system.

It is a matter for AIB in the first instance to review its internal procedures in these matters. I heard Mr. Buckley explaining this morning that the complexity of the fraud is such that it was very difficult to detect. This trader was taking positions but he was hedging them off or insuring against them by taking another position so the net effect on the balance sheet on any day would have been very small. He used false invoices to hedge off and it was only as the exposure got bigger and he had to supply cash that people began to look at him.

It is not fair to compare the DIRT matter to this incident. The DIRT matter was one on which there was considerable difference of opinion between people in AIB and other financial institutions as to what had occurred around 1991. The Public Accounts Committee met and formed its view and we got a considerable amount of money as a result. The two things are not comparable. The most important aspect of today is as a wake-up call to the debate we have been having over the past three and a half years, which has gone in a particular direction that I would not have chosen. The view expressed by Deputy Noonan was closer to my view than to that of the Labour Party. A balance must be struck between the consumer aspects and the prudential elements. The [1485] most important aspect from my viewpoint is the prudential element.

Mr. Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan I put it to the Minister that the most important task in the wake of this appalling fraud is assurance and re-assurance from the Minister. What re-assurance can he give Irish investors, particularly those people whose pensions depend upon the financial institution involved, that there will not be any adverse impact or consequences?

Does the Minister accept that it is quite an extraordinary situation that in the years after the Barings Bank-Nick Leeson fraud that financial institutions do not appear to have learned sufficient lessons. What lessons are to be learned by us in this jurisdiction? When will he bring forward the legislation that is long outstanding and long overdue? He conceded a few moments ago that today's actions serve as a wake-up call to himself and his Government. Can we have confirmation that this legislation will be before the House this session and passed before a dissolution of the current Dáil, having regard to the urgency involved?

It has been reported that in the aftermath of the fraud AIB, in the words of the Minister, will take the hit. It has been suggested that it will offset this loss against its tax. If that is the case then we are dealing with a fundamental unfairness in the system, that somebody can set-off the consequences of a fraud against tax compared to the individual who can have his house burgled or who may be subjected to a fraud and cannot set-off any of his or her losses against tax. Will the Minster confirm that such a regime exists that will allow the bank to set off this huge amount of money against tax that would otherwise be paid to the Exchequer?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy With respect to Deputy Flanagan, I do not know what accountancy training now forms part of the solicitor's courses, but there is certainly an accountancy element to it. There certainly was in my day and I am sure there still is. Any individual in business, be it a solicitor's practice or any other, is allowed to set-off the losses it incurs against total profits.

Mr. Belton: Information on Louis J. Belton Zoom on Louis J. Belton Fraud.

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy This—

(Interruptions.)

Mr. McGrath: Information on Paul McGrath Zoom on Paul McGrath It is the same thing.

An Leas-Cheann Comhairle: Information on Rory O'Hanlon Zoom on Rory O'Hanlon Allow the Minister without interruption.

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy This is not to set-off against tax. It will be an expense in the profit and loss accounts of the AIB group, the same as in Deputy Flanagan's business if he is paying staff in Portlaoise that are not working for him. That becomes an expense in his profit and loss account. There is no difference in that for any business.

[1486]Mr. Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan But if I am held at gun point in the street?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy The profits of AIB – which are expected to be in the order of £1.4 billion – will be reduced. It will take it all back against the 2001 figures the same as the bank, or any other institution, makes provision against specific bad debts. There is nothing new about that.

With regard to pension funds I heard what the chief executive of the Irish Association of Investment Managers said at lunch time. He spelled out what the situation is here, that no pension fund over-exposes itself to any one stock. Pension funds' trustees strike a balance between stocks, equities, bonds and other investments. Generally with equities the bigger funds keep a proportion of their equities in different stocks in proportion to the weighting that stock would have in any market. From a count it did of the pension funds this morning, the exposure to AIB appears to be only of the order of 2% in managed funds. That is what trustees of any pension funds do and they do not take a position stronger than that. Since we joined the euro, one of the weaknesses of the Irish market has been that the pension funds have been lessening their dependence on Irish stocks because it is all euro denominated stocks. They are taking the weighting of the Irish market in the context of the euro market so there will be less independence there. The losses in some pension funds will be made up by gains in others. If one had stayed with cash last year and not taken any position with equities it would have been a reasonable year whereas most pension funds showed a negative for the past year. In that respect there is nothing to be overly concerned about.

The Deputy raised a question as to what lesson had been learned regarding the Nick Leeson-Barings Bank debacle of recent times. All of the financial institutions have tried to put in procedures that would not allow that type of operation to evolve but it is obvious from the AIB case that when people collude and the fraud is complex the new procedures do not work.

With regard to the new Bill, it has been with the Chief Parliamentary Counsel for some time and was returned in recent days. It runs to more than 200 pages already. There have been consultations with the European Central Bank, which has a considerable legal role in how the regulatory central banks operate within the Euro system. I hope the Bill will be published in this session. It is a major tome and in my earlier reply to Deputy McGrath I revisited some of the issues which had to be addressed and are still being addressed within this House, and outside, as to the various aspects of which the Bill should take account.

Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell The Minister has given an interesting discourse about the debate within this House about the nature of regulation which, as he knows, reflects the debate within Government on the same issues. Perhaps that debate is a good [1487] thing but it really misses the point because what we see today is evidence of a gigantic failure of prudential regulation. It is not reassuring for people to hear the Minister say that if two people collaborate they can defy all measures of prudential regulation. We must surely be capable of devising a system to prevent one or two people virtually bringing down the biggest public company and the biggest bank in this country. If that did not happen on this occasion, it could easily happen on another occasion. We need reassurance from the Minister and the Central Bank that our regulations are up to that job and can prevent that sort of potential catastrophe happening. What is the precise role of the Irish Central Bank in regulating foreign subsidiaries of Allied Irish Banks? What role has it played over the past year or so, during the course of the development of this crisis in Allfirst in regulating Allied Irish Banks and its subsidiary in the United States? What role is it currently performing and what role does the Minister see it performing, over the coming weeks and months, in further regulating and exploring what has happened?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy This matter will have to be addressed by the US federal authorities, as the body charged with the regulation of banks within their sector.

Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell Has the Irish Central Bank not also got a role?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy Yes. In the same way as the federal authorities in the US, the Irish Central Bank is the primary regulatory authority for the Irish subsidiaries of foreign banks, such as those of Germany, France and the United States. Our success over the past 14 years in developing the Irish Financial Services Centre is attributable to the reputation that our Central Bank has garnered in relation to its regulatory functions. There are also other reasons for the success of the IFSC but, in the view of the banks operating there, one of the key reasons has been the reputation of our Central Bank and the regulatory environment which it has operated. In all the hoo-haa of recent years about other matters, including DIRT, that key aspect has been forgotten. On the basis of the Central Bank's reputation, people are prepared to invest in subsidiaries in the IFSC because they know they are regulated to the very highest standards. I welcome this opportunity to emphasise that again.

The current situation in AIB's US subsidiary is, in the first instance, a matter for the Federal Reserve in the United States.

Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell Not exclusively so. Our Central Bank must also have a role.

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy Yes, just as the German central bank has a role in relation to the group business of a large German bank subsidiary in Ireland. [1488] The Irish Central Bank has visited the US to meet the Federal Reserve concerning this bank and other institutions there. On the last such visit, in May 2001, I understand the Federal Reserve, which also has a high reputation, examined this bank and gave a glowing report on it. It is not true to say this debacle was capable of bringing down the AIB group. Perhaps in the mid 1980s, depending on one's view of those issues, that potential may have existed but that is not the situation in 2002. This once-off hit will reduce the profits of AIB for last year, which will still be considerable, but the effect on the capital adequacy ratios of AIB is very small. Even after this, what is known as the tier one adequacy ratio is much higher than any of its competitors and well above what would be regarded as a benchmark. I wish to put it clearly on record that there is no threat at all to the AIB group and people can rest assured in that regard.

Mr. Belton: Information on Louis J. Belton Zoom on Louis J. Belton Does the Minister regret that he and the Tánaiste delayed so long in establishing the regulator to oversee our financial institutions? Does he agree that he did not take adequate initiatives in this regard, especially after the DIRT inquiry? That should have been a wake-up call for any Minister for Finance and he still has not acted in that regard.

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy As I made clear in my reply, irrespective of any new Bill, this situation occurred in a bank in the United States. It has no bearing at all on whether we had a new Bill or greater emphasis on consumers or prudential regulation or whatever. The debate which has gone on, inside this House and outside, has been divided. The Labour Party's position was totally different from its leader's position. The Central Bank had a different position to that of the Department of Enterprise, Trade and Employment. I set up a nine-man implementation group, all participants very able people, and I got three separate reports from them. There were considerable differences but it boiled down to one major difference. With regard to Deputy Belton's point, the regulation of the Allfirst financial institution in the United States was a matter for the US Federal Reserve. The Irish Central Bank only has a role in relation to the AIB group and, like other central banks, it liaises constantly with other regulatory authorities in the countries concerned.

An Leas-Cheann Comhairle: Information on Rory O'Hanlon Zoom on Rory O'Hanlon I will take one more question from each of the three Deputies who submitted questions. I call Deputy McGrath.

Mr. McGrath: Information on Paul McGrath Zoom on Paul McGrath I am glad the Minister has put it clearly on record and I hope the message goes out that the bank itself is safe and the shareholders are protected. An important issue which has not been mentioned is the protection of staff jobs within the AIB group in Ireland. I welcome the assurances the Minister has given. Can he confirm that the principles which are now [1489] adopted by the EU in relation to ratios of capital against risk asset are absolutely secure in the case of this bank and that it complies with them? The Minister pointed very clearly to the internal auditing system within AIB in giving rise to the present problems. Does he agree that AIB seems to have fallen down badly in that regard and that it is regrettable, having regard to what happened in the past, that senior management had not seen fit to strengthen the management systems and auditing procedures within AIB?

The Minister spoke of the AIB loss being written off for tax purposes against group profits within this State. He proceeded to remind us that this can be done by any business. Is it not strange that any company or business of that nature can write off losses incurred as a result of a fraud against their profits but anyone who is mugged on the street or whose house is burgled has no comeback? Is it fair that big business can write off losses at the ultimate expense of the taxpayer, while ordinary individuals who suffer losses cannot gain redress?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy I had not thought this would become a debate on accountancy practices. There are many farmers in County Westmeath. Would the Deputy expect them to pay tax on losses? If a farmer from the county has all his stock stolen and he does not have insurance, he will have less profits – more probably a loss – in the year in which the theft occurred.

Mr. Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan If his tractor is robbed he cannot sell it off.

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy One pays tax only when one makes a profit. On that basis, people in the business of selling, buying and lending money are in the same business as farmers who sell and buy cattle and shopkeepers who buy and sell goods. There is no difference between them. People are never asked to pay tax on profits they do not make. If I was in business as a shopkeeper and my premises was raided, I would be making less profits and would, therefore, have to pay less tax.

The Deputy referred to the Basle and EU guidelines. These require that banks hold certain and minimum amounts of capital. This capital must be held in specified types of assets to ensure that in the event of difficulty, the bank will not only have sufficient assets to meet its obligations but has them in an accessible form. Even after the event under discussion, AIB's capital ratios are comfortably above the requirements laid down. In a statement this morning, AIB stated:

The impact is to reduce AIB Group's tier one capital ratio at 31 December, 2001 from 7.2% to 6.4% with total capital reducing from 10.8% to 9.9%. The Allfirst tier one capital ratio reduces from 10.5% to 7.2% with total capital reducing from 13.3% to 10.0%. These capital ratios remain strong by international financial standards.

[1490]Mr. Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan Does the Minister accept this has been a particularly black week for Irish companies trading on the international stage? As Minister for Finance and an important member of the Government, what can he do to restore confidence particularly having regard to the fact that the reputation of Irish companies trading on the international stage is somewhat at stake? How can we recover from what has happened at AIB and how can we ensure the damage and adverse consequences will be minimised?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy Let us look at this another way. I do not believe the city of London's reputation suffered to a large extent when Mr. Leeson caused difficulties for Barings. The reputation of the city of London was such that trading there continued. AIB and Elan comprise approximately 40% of the value of the Irish Stock Exchange and are two of its heavy hitters. Both of these major companies have had a particularly bad week. As companies that are associated with Ireland, it would be far better if their recent troubles had not occurred. The circumstances relating to the downward spiral in Elan's share price and the difficulties experienced by AIB are different and are not comparable.

Mr. Flanagan: Information on Charles Flanagan Zoom on Charles Flanagan They are comparable in terms of their both involving bad news.

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy Élan's difficulties resulted from the new scrutiny of accounting practices that came about following the collapse of Enron in the United States. The latter company had a market capitalised value of $80 billion but, a mere matter of weeks later, it is now worth very little. People began to question the accountancy practices of various corporations following the Enron collapse and Élan suffered as a result. It was then obliged to issue a profit warning which further affected its share price.

AIB's share price fell by approximately 10% this morning and by 1.30 p.m. it had fallen by 16%. This reflects the view the market has taken of events. I am not going to advise people to either buy or sell AIB stock. That is a matter for marketeers, who make their money by adopting particular positions.

Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell If this was an ordinary company, we could happily state that this is a management failure and is totally the business of the company. However, that is not the case because AIB is Ireland's bank. Notwithstanding that the fraud took place in one of its subsidiaries in the United States, it will still have significant consequences for Ireland. In most cases one would say that surely there must be some management process in place to ensure that one individual cannot defraud a bank or institution of the amount of money in question. Usually most banks seek to do this by dividing responsibility, by auditing and by putting in place some form of accountability procedure.

[1491]This is a matter of public interest because the security of our banking system is crucial to the operation of our economy. In my opinion the Minister and the Central Bank must discover exactly what happened in the United States and put in place measures to ensure there is not a recurrence. A clear message must go out from the House, the Minister and the governor of the Central Bank that this will be the case.

Is the Minister satisfied that we have been apprised of the full extent of the losses involved? Is he satisfied those losses have either been met or that options have been exercised or hedging has taken place to ensure they are contained? Is he further satisfied with the level of accountability and information he has received from AIB?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy I have not communicated directly with AIB. My information on this matter came from the governor of the Central Bank, from a press conference held by AIB earlier today and from my Department. As the chief executive of AIB stated, it is believed the figure of $750 million put forward this morning will be the extent of the bank's liability. However, he was at pains to point out that this figure was AIB's best estimate of the total loss involved.

The first part of the Deputy's question relates to putting in place procedures to ensure—

Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell Does the Minister agree we need to know these things?

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy The Deputy must realise that it is not possible for me to give the assurance he is seeking at 5 p.m. on a Wednesday. Even AIB, which is directly involved, was at pains to avoid stating explicitly that $750 million would be its total exposure. Other commentators have stated they are of the view it would be the outside limit of the bank's exposure. I am not in a position to provide any cast-iron guarantees.

Mr. McDowell: Information on Derek McDowell Zoom on Derek McDowell I do not disagree with the Minister and I appreciate that he has come before the House, on short notice, only hours after this story first broke. However, I am seeking an assurance that he, his Department and the Central Bank will seek to obtain this information and satisfy themselves that $750 million is the limit of the liability. We cannot state that AIB is a private company and no concern of ours.

Mr. McCreevy: Information on Charlie McCreevy Zoom on Charlie McCreevy In the first instance, AIB management is doing its best to discover the extent of the liability. Management representatives will report on that matter to the regulatory authorities both here and in the United States. AIB appears to have been working for the past two days to identify its total exposure and make it a matter of public record. The governor of the Central Bank will report to me on any changes he believes should be introduced and on the outcome of [1492] investigations into this matter. I am sure AIB and every other institution would love to have procedures in place which would allow them to guarantee, forever and a day, that nobody would conspire to defraud them. We would be delighted if that was the case.

Written Answers follows Adjournment Debate.


Last Updated: 03/05/2015 07:00:51 First Page Previous Page Page of 183 Next Page Last Page