Accountants told not to sign confidentiality agreements with AIB
THE country's biggest accounting body has told its members not to sign agreements requested by AIB that threaten them with potentially unlimited damages if details of restructuring deals are ever made public.
The bank is thought to fear the effect that deals like debt write-offs for individual business borrowers coming into the public domain could have on other borrowers.
It is seeking 'non-disclosure' agreements from the accountants who work with businesses that are in negotiations with the lender over their debts.
But if this information is ever disclosed, accountants who sign could risk unlimited penalties.
Non-disclosure agreements in debt negotiations are a controversial tactic. Critics say that deals on debts should be transparent.
Austin Slattery, the president of Chartered Accountants Ireland says the very broad non-disclosure letters sought by one Irish bank are unreasonable and damaging to the economy.
Signing the letters could leave individual accountants liable for potentially unlimited damages claims from the bank, which was simply too big a risk for professional firms, he said.
"Letters will act as an obstacle to effective debt resolution, getting businesses and the economy moving," he added.
The accounting body is advising its members not to sign the agreements and is writing to the bank to object to the practice. Accountants are already bound by confidentiality agreements, according to Chartered Accountants Ireland director Aiden Lamb, who says the new letters go above and beyond that.
AIB has already been hit by opposition over the same concern from the Law Society, the body that represents the country's solicitors.
Non-disclosure agreements being pushed by the bank on solicitors working on personal insolvency cases are "unprecedented, legally unnecessary, and objectionable in principle", said its Council and Business Law Committee in the latest issue of the 'Law Society Gazette'.
The Law Society has raised the issue with AIB, which has since dropped the non-disclosure requirement for solicitors advising distressed borrowers – in return for the industry being reminded of its confidentially obligations.