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Saturday 23 August 2014

Global money men will have to testify in banking probe

The new head of the banking inquiry tells Philip Ryan that no one will be let off the hook during his investigation

Philip Ryan

Published 04/05/2014 | 02:30

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Ciaran Lynch: the banking inquiry chairman

SENIOR executives from international accountancy firms and high-profile consultancy companies will be forced for the first time to answer questions publicly on their role in the financial crisis as apart of the banking inquiry.

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In an interview with the Sunday Independent, the newly appointed chairman of the Oireachtas banking Inquiry, Labour TD Ciaran Lynch, said that if they refuse to attend, the inquiry will have the power to compel them to appear before hearings where they will be grilled on the advice they provided to the Government and banks ahead of the controversial €440bn bank guarantee scheme.

The much-anticipated inquiry also has the power to seek internal emails and correspondences from firms paid millions of euro to audit banks and advise the Government in the months before the €64bn bank bailout.

If requests for information are refused, the committee will have the powers of the High Court to compel agencies to hand over documentation.

Key executives from consultancy firms PriceWaterhouseCoopers and Merrill Lynch will likely be called to give evidence on reports compiled for the Government on the liquidity of the banks in 2008.

Senior figures from Anglo Irish Bank's former auditors Ernest & Young are likely to be called before the newly formed committee, as are KPMG management involved in auditing AIB's books at the time.

Mr Lynch said a witness list had not been drawn up but. But he insisted auditors and consultants would have to explain themselves before the new committee. "These are the witnesses we want to hear. These are the people who provided advice to the Government at the time and these are the people whose advice was acted upon," he said.

The Labour TD said a "multiplicity of options" were put forward by these agencies and it was the inquiry's task to establish the reasoning behind various reports which formed the then government's decision.

Following the release of the Anglo Tapes last year, Finance Minister Michael Noonan warned financial institutions to keep copies of recordings or any electronic evidence which may be relevant to a banking inquiry.

Mr Lynch said the same will apply to consultants and auditors that played a significant role in the banking crisis.

"Evidence and information that falls within the terms of reference will certainly be sought and if necessary be compelled," he told the Sunday Independent.

He also revealed that the inquiry would be able to make legislative recommendations as part of it findings which would "future proof" the country against further financial disasters.

"The outcome of the inquiry would have to compose findings of fact which would have relevance to the future in terms of recommendations which would be made to ensure the State doesn't find itself encountering a similar dilemma," he added.

Many have been cynical about the timing of the embattled Government's announcement of the banking inquiry

It came just days after the massive media scrum that descended on Dublin's Circuit Criminal Court for the end of the two-month trial of former Anglo chairman Sean FitzPatrick and his two co-accused, William McAteer and Pat Whelan.

Perhaps knowing the cameras would be looking for another target, the Government last week announced the establishment of the long awaited bank inquiry.

After weeks of bad publicity, the Coalition could now offer the distraction of a show trial beamed live from Leinster House to distract voters from the increasing number of charges added to their monthly household budgets.

After all, when people are not giving out about water taxes they are busy being outraged by the massive salaries paid to charity bosses and bank chief executives.

Unfortunately, the public will have to at least wait until early next year before they can watch former Taoisigh and bankers get torn to shreds by 'unbiased' TDs seeking to get to the bottom of the financial crisis.

In the meantime, a lot of research or 'scoping' needs to be done before any grilling can happen.

Despite a note from Government on the issue last week there is still not much by way of certainties.

We know Mr Lynch, who chairs the Finance Committee, will lead the nine member inquiry which will be weighted in favour of the government parties.

The committee is the first of its kind and based on legislation passed last year in reaction to the public's decision to vote against a constitutional change which would have given politicians more power of inquiry.

The committee will comprise two members each from Fine Gael and Labour with Sinn Fein, Fianna Fail and the independents selecting one representative. Fine Gael will put forward a senator and another will come from the opposition benches.

The main concern in selecting members is ensuring the chosen few have not said anything in the past to compromise themselves during debates.

TDs will also be precluded from taking part in the inquiry if they have personal financial issues which could raise concerns about their impartiality.

Even with Mr Lynch it is not difficult to find previously published comments from him berating former political leaders who will likely attend the hearings.

Fianna Fail selected the party's finance spokesman Michael McGrath, who regularly criticised those at the helm of the banks during the days leading up to the crash.

Other early favourites for committee membership – People Before Profit TD Richard Boyd Barrett and Sinn Fein's Pearse Doherty – have also been extremely vocal in their opinions of bankers and fellow politicians.

Lynch said the bias issue needs to be "looked at sensibly and not to be confused with the adversarial nature of the Dail".

"Where bias comes in is when people have made personal allegations on occasion," he told the Sunday Independent.

Mr Lynch insists he personally is "not beholden to any financial institution", but said those that are would not be suitable for the inquiry.

Fine Gael is likely to nominate Public Account Committee member Kieran O'Donnell and possibly Dara Murphy. Regina Doherty could be an outside favourite to ensure a slight gender balance in the male-dominated inquiry team. The hot favourite for the second Labour seat is Dublin TD Kevin Humphreys.

Boyd Barrett will fight it out with fellow Technical Group members Socialist Party leader Joe Higgins and Independent TD Stephen Donnelly.

PAC chairman John McGuinness, who once hoped to chair the inquiry, is now calling for a review independent of politics. Other TDs are shying away from a potential call-up due to the volume of work involved in the inquiry.

Once committee membership is arranged the panel will meet to decide on the specifics of the inquiry with the major discussion points being the witness list and the timeframe it will investigate.

Mr Lynch laid out a marker last week when he said: "This will not be an 'all-inclusive whatever you're having yourself' inquiry."

This means it will likely only cover events that happened under the previous administration's watch.

The international financial crash and the months leading up to the Fianna Fail-led Government's decision to introduce a blanket guarantees for bank deposits will feature heavily.

Less likely to be discussed during proceedings will be the bondholders and the late-night liquidation of the Irish Bank Resolution Corporation – the former Anglo Irish Bank.

Mr Lynch thinks a separate inquiry into the liquidation of IBRC "is justified in its own right".

Finnish financial expert Peter Nyberg's highly critical report on the banking crisis and Central Bank Governor Patrick Honohan's review will be used as road maps for the committee's hearings.

The Dirt inquiry into tax evasion during the Nineties is being touted as the model which will be used for the preparatory work and the hearings.

A budget of around €5m will be set and around 50 staff – including barristers and financial experts – will be hired to trawl through the miasma of banking documents and reports.

Despite suggestions the inquiry is a waste of time and money, Mr Lynch maintained the public has a right to hear from those responsible for the most expensive economic decision taken by the State.

Sunday Independent

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