Tuesday 27 September 2016

Cowen decided on bank guarantee 'after talks with Lenihan that night'

Published 17/06/2015 | 02:30

Decision: Brian Cowen
Decision: Brian Cowen

Former Taoiseach Brian Cowen ultimately decided to introduce the €440bn blanket bank guarantee after a private conversation with his finance minister Brian Lenihan on the night in question, the Oireachtas Banking Inquiry will hear today.

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The inquiry has also decided to refer the leaking of evidence to be heard tomorrow to a national newspaper to the gardaí for investigation.

The then secretary general of the Department of Finance, David Doyle, is expected to say that Anglo Irish Bank was out of cash on the night of September 29, 2008, yet the financial regulator said the bank was still solvent and profitable.

The Irish Independent understands that Mr Doyle will detail his account of the dramatic events on the fateful night when he appears at the inquiry later today.

He is to say that the two banks - AIB and Bank of Ireland - which approached the government that night, expressed grave concerns as to the potential impact of Anglo Irish Bank on the wider system.

He is likely to say they also expressly sought a broader guarantee for all six banks, which would appear to contradict earlier evidence from former AIB CEO Eugene Sheehy that they sought a more limited guarantee, which excluded Anglo and Irish Nationwide.

It is expected he will say that through the night, the pros and cons of either nationalising Anglo and having a guarantee for the rest of the banks versus a blanket guarantee, were debated several times. He will say the main viewpoints in the debate were that there was a strong case for an immediate nationalisation of Anglo.

However, the main opposing view was that nationalisation at that point could lead to an undermining of the banks and the guarantee, Mr Doyle is expected to tell the inquiry.

He is expected to go on to say that Mr Cowen and Mr Lenihan left the room at one point and on their return, it is his recollection that Mr Cowen said they had decided to recommend a guarantee to the Cabinet and that Anglo would not be nationalised.

Mr Doyle is expected also to say that one of the main reasons against nationalisation was the view from the European Central Bank that no bank should be allowed to fail.

Meanwhile, the inquiry is to refer an alleged leak of material to An Garda Síochána.

In a statement, the inquiry said the statement of witness Kevin Cardiff was "confidential" and that its publication may constitute a criminal offence. Mr Cardiff is the former secretary general of the Department of Finance. He is due to appear in front of the inquiry tomorrow.

His lengthy statement was published in a Sunday newspaper - prompting the inquiry to decide today to refer the matter to gardaí. "The concern for the committee is that the documentation in its totality has a particular legal protection and, in that light, the committee is writing to the relevant person(s) who were sent the documentation and the media outlets which are now in possession of documentation to remind them that to publish the documents would be an offence," the statement said.

Meanwhile, businessman Denis O'Brien will not be compelled to appear before the inquiry. The committee decided against calling him in, despite calls from Fianna Fáil TD Michael McGrath for him to appear.

Irish Independent

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