Business Irish

Saturday 3 December 2016

Banking Inquiry to call on IMF following Chopra's criticisms

Colm Kelpie and John Downing

Published 20/04/2015 | 02:30

Ajai Chopra
Ajai Chopra

The Banking Inquiry will ramp up efforts to persuade the International Monetary Fund (IMF) to engage with it in the wake of comments from Ajai Chopra that the European Central Bank (ECB) pressed Ireland into committing to austerity.

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The IMF has said it would not be available when the inquiry first made contact with it last December, it has emerged.

But there is a new clamour to get an IMF representative before the inquiry, following comments from Mr Chopra published by the Irish Independent at the weekend.

Mr Chopra, the IMF's former mission chief to Ireland, believed the ECB acted in an "outrageous" manner in its correspondence between its then president Jean-Claude Trichet and the late Brian Lenihan in 2010.

Banking Inquiry chair Ciaran Lynch said its efforts have so far been focused on persuading the ECB to send a representative, and once that is completed, attention will shift to the IMF.

Dialogue

"We have tried to open up a dialogue with the IMF, but the concentration has been on the ECB and if that methodology works out, we can then go back to the IMF and say we have a protocol, and can you work with us," Mr Lynch said.

"There was earlier contact in the context phase (before Christmas) in which they were not co-operating with us.

"It was a strange letter about not being available at this time. It wasn't a yes or a no."

Mr Lynch said the inquiry decided that it would focus its attention on securing evidence from the ECB and Mr Trichet and then intensify its engagement with the IMF.

Speaking about the Irish Independent story, he said: "That will ramp that whole issue [the IMF's engagement with the inquiry] up quite significantly. It's always been our position to seek an engagement from the IMF," Mr Lynch added.

At this stage, it is not clear if Mr Chopra will be approached to personally attend.

Mr Lynch also said that legal advice to the committee says that they can find a way to collect evidence from Mr Trichet when he visits Dublin for a speaking engagement on April 30.

"I am advised that we can collect Mr Trichet's evidence in a form which is usable for questioning other witnesses and in our final report," said Mr Lynch.

Mr Trichet had repeatedly said he could not formally testify to TDs and senators at the Oireachtas inquiry.

But a personal request from Taoiseach Enda Kenny yielded a message from the ECB that it would seek to co-operate in some form.

The former ECB president was in charge in autumn 2008, at the time of the controversial Irish banking guarantee.

He was also there in November 2010, when Ireland was obliged to enter the EU-ECB-IMF bailout.

On Saturday, the Irish Independent revealed that Mr Chopra told an audience at Oxford University that elements of the so-called Trichet letters were an "outrageous overreach" by the ECB.

In a stinging criticism of the bank, Mr Chopra says he isn't surprised people in Ireland were upset about the letters between the former ECB president and the late Brian Lenihan in 2010, in which Mr Trichet threatened to cut off funds for the Irish banks if the Government did not apply for a bailout.

The Frankfurt-based ECB eventually released the letters last November, giving a fresh insight into the build-up to Ireland's entry into the programme in late 2010.

What Chopra said

Ajai Chopra told an audience at Oxford University that elements of the so-called Trichet letters were an "outrageous overreach" by the European Central Bank.

In a stinging criticism of the bank, Mr Chopra says he isn't surprised people in Ireland were upset about the letters between the former ECB President Jean-Claude Trichet and the late Brian Lenihan in 2010, in which Mr Trichet threatened to cut off funds for the Irish banks if the Government did not apply for a bailout.

"The letters actually pressed Ireland to do fiscal consolidation, it pressed them to undertake vague structural reforms without specifying what these were, and that, in my view, is an outrageous overreach by a central bank," Mr Chopra said.

The letters urged the then Government to commit to structural reforms and the restructuring of the financial sector. "That is not their job," Mr Chopra said. "Their mandate is to meet inflation. And if you lecture the ECB as to how they might go about that, they talk about their independence.

"But when it comes to lecturing others about fiscal policy or structural policy, they're not at all hesitant."

Irish Independent

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