Firm removes €450,000 from BoI account in funds row
ALMOST half a million euro of taxpayers' money has been removed from a Bank of Ireland account to protect it from being seized by the bank and offset against a company's loans.
The Galway Airport Company has taken the extreme measure after the bank seized €1.1m held on deposit by the airport and unilaterally decided to use it to reduce existing company loans.
The move has sparked considerable anger among the business community in Galway -- Galway Chamber of Commerce and Industry is the biggest shareholder in the airport company and has insisted that all of its loans were fully paid up to date and not in default.
The chamber has revealed that it has been dealing with repeated calls from business people in Galway who were now concerned that funds held on deposit with Bank of Ireland might also be arbitrarily seized by the bank and similarly used to offset loans. Chamber president Declan Dooley said the bank's action was unprecedented and had shocked the business community as it was taken without any consultation. The chamber is now considering the possibility of seeking a High Court injunction to have the funds restored.
The Department of Finance provided €2.1m to the airport in December for operational expenditure funding for 2011 and also to finance redundancy payments after 47 workers were laid off last October.
A fortnight ago there was €1.6m in the account, but Bank of Ireland made the shock phone call to the chairman of the airport company on January 27 to advise him that, in accordance with the terms of the loan agreement, the bank had accessed €1.1m and offset it against the outstanding loans.
The company has since withdrawn €450,000 from Bank of Ireland and lodged it in another bank.
Mr Dooley said: "We have consulted with senior banking people across the industry and all agreed that this kind of action is unprecedented. We haven't heard from Bank of Ireland since this happened.
"This is government money -- taxpayers' money -- and it was made available to the airport company to complete the redundancy programme. That's why we are taking legal advice and looking at the possibility of an injunction."
The Department of Transport is seeking the advice of the Attorney General on the implications of the bank's action and the Finance Minister has asked the bank for a report.
Bank of Ireland has repeatedly declined to comment on the controversy.
Meanwhile, hopes of the Dublin Airport Authority (DAA) monopoly being immediately broken up have been dashed by Taoiseach Enda Kenny.
Mr Kenny, speaking at the Cork Chamber of Commerce dinner, warned that Cork Airport's huge debt burden simply cannot be dealt with in the short term.
The debt is estimated to be worth in the region of €100m.