€18m bill for advice on banks -- then it was ignored
THE Government paid professional advisers more than €18m as the banking crisis loomed, new figures reveal.
But it still ended up introducing a state banking guarantee, even though its chief adviser, investment bank Merrill Lynch, had warned that this could be a mistake and could affect Ireland's national credit rating.
And despite the huge sums of money involved, some of the highly paid firms 'didn't bark' about the scale of the toxic loans in the banks.
The firms that received fees included Merrill Lynch (€7m); legal firm Arthur Cox (€7m); KPMG (€2m); Rothchilds (€1.4m); and PricewaterhouseCoopers (PwC) (€750,000).
Labour TD Pat Rabbitte complained yesterday about the quality of the advice provided in the run-up to the state banking guarantee, pointing out that PwC had not discovered much in its examination of Anglo.
"Talk about retaining a dog and barking yourself -- it didn't come back with a great deal," he said.
At the Dail's Public Accounts Committee yesterday, Fine Gael TD Jim O'Keeffe said PwC had reported that just 3pc of Anglo's loans were impaired (not performing). It had based this on information given by Anglo's own accountants.
But Department of Finance secretary-general Kevin Cardiff defended PwC's work on the grounds that it had been hired on September 24, 2008, to look into Anglo Irish Bank but could not establish a clear picture before the bank guarantee was announced just five days later.
The committee of TDs heard that Goldman Sachs carried out an examination of Irish Nationwide for the Financial Regulator -- but that the costs of this were picked up by Irish Nationwide itself.
The banks were levied €3.4m by the Financial Regulator to cover some of the cost and the Department of Finance recovered an unspecified amount.
The committee also heard that the Department of Finance did not notify Finance Minister Brian Lenihan about the €7.5bn 'bed and breakfast' loan that was transferred from Irish Life and Permanent to Anglo Irish Bank at the end of each financial year in order to boost the latter's balance sheet.
The transfer of the loans between Anglo and Irish Life and Permanent is currently being investigated by the Office of the Director of Corporate Enforcement as part of its inquiry into Anglo Irish Bank.