World

Tuesday 22 July 2014

Draghi told to 'drop confusing words and back debt deal' amid claims it is illegal

Donal O'Donovan

Published 18/02/2013|04:00

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uropean Central Bank (ECB) President Mario Draghi. Photo: Reuters

The president of the ECB will be asked to make "absolutely clear" his support for the deal to restructure the notorious Anglo Irish Bank promissory notes in Brussels today.

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Mario Draghi has been criticised for his use of confusing language after saying his bank's board had "unanimously noted" the deal when it was agreed earlier this month.

At a Fine Gael meeting at the Mansion House in Dublin last night, MEP Gay Mitchell said he would ask Mr Draghi to make his position clear today when he appears before a meeting of the the Economic and Monetary Affairs Committee of the European Parliament.

Government politicians and officials insist the agreement is not in doubt, despite high-profile claims it could be illegal.

"It is beyond any doubt that the deal stands," Mr Mitchell said.

No move has been made to challenge the legality of the deal to wipe out the Anglo promissory notes and the Government has "no concerns" over its legality, officials said.

It follows weekend reports claiming the deal, hailed by the Government as a major breakthrough in restoring the State's financial position, could breach ECB rules.

Junior minister Brian Hayes told RTE yesterday such claims were "fanciful", with some of the attendant commentary "utterly ridiculous".

However, former chief economist at the ECB, Jurgen Stark, has questioned the legality of the agreement to shut down the former Anglo Irish Bank and rewrite the financial terms associated with the collapse of the bank.

The Government says the changes will result in a saving of €20bn.

Mr Stark is regarded as a hardliner in terms of ECB policy. He resigned from the bank in 2011 over its decision to support euro-area countries by buying their debts on the market.

In an article in Germany's influential 'De Welt' newspaper, he said the new Irish deal breached EU treaty rules.

And, writing in the 'Sunday Independent', the former chief financial officer of Anglo Irish Bank, Maarten van Eden, said the deal breached the ECB's "fundamental rule against monetary financing".

He also said that the decision to liquidate Anglo could damage efforts to recoup the €15bn the bank was still owed by as much as 20pc more than the losses likely in a more orderly wind-down.

However, last night a spokesman for the Department of Finance said the legality of the deal was not in doubt.

"The terms of the deal were subject to rigorous legal scrutiny by both Irish officials and the ECB before it was announced," he said.

Irish Independent

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