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Commission of Investigation (Irish Bank Resolution Corporation) Bill 2016: Second Stage (Continued)

Friday, 8 July 2016

Dáil Éireann Debate
Vol. 917 No. 2

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(Speaker Continuing)

[Deputy David Stanton: Information on David Stanton Zoom on David Stanton] Permitting the commission to sit in divisions will also mean that the concern identified by the commission in its first interim report relating to a possible conflict of interest between a member of the commission in relation to any particular transaction can be avoided by allowing that transaction to be investigated without the involvement of that member, should the need arise.

Section 6 of the Bill addresses the disclosure of information by the special liquidators to IBRC to the commission of investigation. Determination No. 1 of the commission addresses the assertions of duty of confidentiality and legal professional privilege which have been asserted by the special liquidators and which the commission has found to apply.

The issues regarding the duty of confidentiality have been addressed through section 2 of this Bill in relation to which I have already spoken. However, in its determination, the commission further found that it had no power under the 2004 Act to admit into evidence documents over which a claim of legal professional privilege was asserted and found to apply. While it is understood that the special liquidators offered to the commission a limited waiver of legal privilege for certain transactions, nonetheless the commission considered that it could not proceed further or admit into evidence such documents. It is clear from the commission’s decision on legal advice privilege set out in determination No. 1 that the Commission was only seeking to obtain those documents which the directors of IBRC have received in the past which relate to legal advice which they might have received in respect of the write-offs of certain loans by IBRC and which are the subject of the current investigation.

While the special liquidators were willing to disclose the documents to the commission for the purpose of the investigation it did not consent to the documents being provided to any third parties although the special liquidators agreed to consider waiving privilege on a case by case basis. The inability to forward such documents to the former directors of IBRC would, in the view of the commission, deprive them of their right to fair procedures and their right to respond to the commission in a meaningful way.

Section 6 addresses the concerns raised by the commission. First, subsection (I) introduces a general requirement on the special liquidators to comply with all directions by the commission under the 2004 Act. With respect to the assertion of legal privilege by the special liquidators in respect of documents previously received by the directors of IBRC, subsection (2) will amend the Irish Bank Resolution Corporation Act 2013 to insert a new provision into section 9 of that Act. Section 9 provides for the Minister for Finance to issue instructions and directions to the special liquidators and the new subsection (2A) to be inserted by this Bill will provide that the Minister may, for the purpose of enabling the commission of investigation to perform its functions, give a direction to the special liquidator to do or refrain from doing a specified act. This may include a direction from the Minister to the special liquidators to waive legal professional privilege. There is no obligation on the Minister to issue such a direction and it will only arise where the commission requests the Minister to do so and informs the Minister, in writing, that the direction is necessary to enable the commission to perform its functions and it is in the public interest to do so. The basis for issuing such a direction would be the connection to the purposes of the IBRC Act as set out under section 3 of that Act and which, I remind this House, includes "to protect the interests of the taxpayer".

Section 7 will disapply section 118 of the Companies Act 1990 to enable the Irish Stock Exchange to provide confidential information to the IBRC commission who may admit it into evidence. Determination No. 3 of the commission, published in April, concluded that certain documents sought from the Irish Stock Exchange were confidential pursuant to section 118 which provides for professional secrecy in respect of documents obtained by the Irish Stock Exchange in pursuance of its functions under Part V of the 1990 Act in relation to insider dealing. As this is effectively a statutory duty of confidentiality, section 7 of the Bill will disapply it in respect of the disclosure of information to the commission.

Finally, in terms of the substantive provisions of the Bill, section 8 will amend the Commissions of Investigation Act 2004 but only in so far as it applies to the IBRC Commission of Investigation. Paragraph (a) amends the definition of document under the 2004 Act so that it replicates the definition under section 2 of this Bill. Paragraph (b) amends section 34 of the 2004 Act, again only in so far as it applies to the IBRC commission. Under section 34, a draft of any report by a commission of investigation must be distributed in advance of submission to the specified Minister and to any person who is identified or identifiable in that report. The provision in section 8(b) of this Bill will limit the distribution of the report to persons in respect of whom there is an adverse finding. This has been specifically requested by the commission to reduce the level of distribution which would otherwise be required on the basis that there is a strong likelihood of many persons being identified in the report but in respect of whom there would be no adverse finding.

Section 9 deals with the commencement of the legislation. I think Members of this House will agree that although this is not a long Bill, it will provide significant additional powers to the Commission of Investigation into IBRC. Given the conclusions and recommendations reached by the commission in the determinations and interim reports published to date, and following consultation with the Opposition, and with the commission itself during the drafting of this Bill, all of these provisions are proposed in order to ensure that the task set by this House back in June 2015 is conducted as effectively as possible.

I remind Deputies that the very significant public concerns regarding certain transactions carried out by IBRC, and which were recognised and acknowledged by this House, must be addressed in a comprehensive manner.

Finally, before I finish I would just like to return to a matter that I briefly mentioned earlier. Given the number of transactions undertaken by IBRC which have been identified and which involve losses of greater than €10 million, I understand that again following consultation with the Opposition, amended terms of reference will be brought forward shortly proposing a modular approach to the investigation with a focus in the first phase on the Siteserv transaction, being an issue of significant public concern raised in this House. This pragmatic approach will allow the commission to focus its efforts in the first phase.

The Government intends to brief the Opposition leaders on these revised terms of reference next week, and a draft Order with the revised terms of reference will then need to be approved by both Houses of the Oireachtas, hopefully before the summer recess. I also understand that, as requested by the commission under section 6(6) of the 2004 Act, the Taoiseach has recently agreed to extend the timeframe for the commission until the end of October 2016. This will allow the commission to continue its preparatory work while the legislation is being enacted and the terms of reference amended as I have outlined.

I thank the leaders and Members of the Opposition for their contribution in reaching a solution to the issues raised by the commission and which would, if unresolved, have undermined the ability of that commission to reach findings in relation to the investigations involved. I look forward to hearing the contributions from the Members today.

Finally, I thank the Ceann Comhairle and Deputies for facilitating the Second Stage debate in this House today.

Deputy Dara Calleary: Information on Dara Calleary Zoom on Dara Calleary On behalf of Fianna Fáil I endorse everything the Ceann Comhairle said regarding the farce at the start of business today. We waited 35 minutes to get a quorum to allow business to start. It is unfair on the Deputies who were in the Chamber. I understand that the person in charge of business was on her local radio station talking about Fine Gael leadership which is a matter for the Fine Gael Party-----

An Ceann Comhairle: Information on Seán Ó Fearghaíl Zoom on Seán Ó Fearghaíl We should not get into that now.

Deputy Dara Calleary: Information on Dara Calleary Zoom on Dara Calleary -----but when it impinges on the business in the House it is not good enough.

I welcome the opportunity to speak on this legislation. The controversy around the sale of Siteserv fused together a number of issues that raised serious public concern. The legacy of Anglo Irish Bank, the enormous sums of taxpayers' money used to resuscitate the banking system and the exorbitant money spent on rolling out water meters were all linked together. Wealth, politics and policy were all woven together into a potential scandal that could simply not be ignored. In this light Fianna Fáil supports today’s Bill as a mechanism to ensure that the issues raised are fully and transparently dealt with.

Anglo Irish Bank was the nadir of the banking crisis. Some €34 billion was expended on that bank alone in an effort to stop the rot and staunch the bleed of the crisis. Countless families suffered and continue to suffer from the consequences of the decisions that caused the crisis. These repercussions are not simply financial but stretch deeper into people’s lives and the fabric of the State.

The State took action to tackle the disaster engulfing the banking sector at that stage. Taxpayers' money was used to try to salvage the banks and their vital role in the broader economy from a plummeting property market. Services and livelihoods suffered as a result of that effort. Getting value for this money must be at the heart of Government policy. This is a matter of both economic and moral importance. The grave impact of the crisis on people's lives must be dealt with fairly.

Against that backdrop and that challenge the emergence of rumours and information around the sale of Siteserv in early 2015 drew massive attention. Siteserv was sold by IBRC at a loss to the State of €119 million. The loss to the State was further reflected in other sales by IBRC and accusations of preferential loan interest rates. The idea that the remnants of Anglo Irish Bank's undersold assets linked to another deeply controversial public policy is incredible. Essentially, public money was grossly abused in order to privilege wealthy clients and it is indefensible in a modern democratic state.

Deputy Catherine Murphy and her staff deserve particular tribute for their assiduous work in this matter and in pursuing a series of damning documents under freedom of information and through parliamentary questions. Her efforts were commendable and are the reason we are here today. It is important to remember the foot dragging and rear-guard action taken by the Government on the idea of a commission. A compromised review by KPMG was an effort to stall calls for a full commission. It was only under significant pressure that the Government of the day relented and conceded the need for a full investigation.

Essentially, the commission was established to investigate and report to the Taoiseach on the substance and management of certain transactions and activities of IBRC that occurred between 21 January 2009 and 7 February 2013. Justice Brian Cregan was appointed the sole member of the commission in July 2015. Fianna Fáil pressed for a commission of investigation to shed light on the answers to the following questions. Why was there a surge in share dealing in Siteserv prior to its sale? There was a sudden upsurge in share sales in the month before the Irish Bank Resolution Corporation began to receive the first bids for Siteserv as part of a confidential sale process.

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