Government to approve inquiry into bank crisis
But review of failures in the system that led to 'disaster' will be held behind closed doors
Taoiseach Brian Cowen and his Cabinet are set to approve a "behind closed doors" inquiry into Ireland's failed banking system when it meets on Tuesday.
Last week, the Cabinet considered the issue of holding an inquiry to learn lessons from the events that led to banking collapse.
Finance Minister Brian Lenihan will bring a set of proposals to the Cabinet on Tuesday on what form the inquiry will take. The Cabinet is "absolutely united'' on the need for an inquiry into the banking disaster of the past 18 months, according to informed sources.
"There's absolutely no question about that. There is a united will in the Government to do this,'' the source said.
But it is expected that the commencement of the inquiry will take some time. The Government's first priority will be to achieve financial stability before getting the inquiry under way.
Defence Minister Willie O'Dea said last night: "In order to correct mistakes of the past, we'll have to examine what went wrong and make sure it doesn't happen again.''
Mr O'Dea said it was vital to set up proper terms of reference for the inquiry so that from day one it will "hit the ground running''.
The announcement of a government inquiry comes at a critical time in the criminal investigation into activities at Anglo Irish Bank, with the arrest of a number of employees at the bank expected within weeks.
It is understood that senior investigators were anxious that any government inquiry would not impinge on the scope of their investigation but concentrate on the broader issues of the lending culture and the outside factors which led to the collapse of the banking system rather than alleged illegality.
The Sunday Independent understands that the preferred option for the inquiry -- subject to Cabinet approval -- is that it would follow the same lines as the clerical sex abuse inquiry which led to the publication of the Murphy report.
In that case there was a report by Judge George Birmingham which set out the terms of reference which were followed by Judge Yvonne Murphy. It is expected that an expert, or experts, possibly from overseas, would be brought in to study the documentary evidence relating to the activities of the major Irish banks in the lead-up to the nationalising of Anglo-Irish Bank and the re-capitalisation of the other major banks.
This would be followed by some sort of commission which would have full powers to carry out hearings in private. But, according to sources, its final report would be published. The object will be to find out what went wrong and to rectify it with all necessary legislation.
According to a government spokesman, a Dirt-style inquiry as recommended by Fine Gael has been ruled out because it would take too long to establish and would be fraught with legal problems, as the proposed Abbeylara inquiry was. The Government is also anxious not to prejudice investigations which are already under way by the Garda and the Director of Corporate Enforcement, Paul Appleby.
Once agreed by the Cabinet, the nature of the inquiry will be set out in the Dail by Mr Lenihan. At present there is no indication as to how long the inquiry will take to report, but the hope is that it would be published within a matter of months.
However, Fine Gael's finance spokesman Richard Bruton said yesterday that an Oireachtas inquiry was still the best way forward and that a Murphy-type enquiry represented a "poor second best" in terms of options.
Speaking to the Sunday Independent, Mr Bruton said: "I am not convinced by the view that the Dail could not handle this inquiry. This inquiry should occur with the Dail at the heart of it and must be held in public and not behind closed doors."
It is understood that the Director of Public Prosecution has been informed about substantial progress in the investigation and would be in a position to brief the Attorney General on the garda view regarding the scope of the banking inquiry.
"The inquiry, if it was to look into the question of alleged wrongdoing, would not be able to get a full and complete picture. That's because many of the individuals who have already been questioned and are involved in the investigation would, on legal advice, decline to appear before the inquiry," a senior source close to the investigation said.
So far the investigations have involved hundreds of interviews with staff at Anglo and officials with other institutions or agencies linked with the failed bank.
The garda strategy in the investigation was to start at the bottom of the organisation and work their way out towards senior decision makers in the bank.