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Monday 5 December 2016

Lenihan was 'threatened' into asking for bailout

ECB chief told former minister he would 'cut off' funding to Ireland

DANIEL McCONNELL Chief Reporter EXCLUSIVE

Published 11/09/2011 | 05:00

European Central Bank boss Jean-Claude Trichet directly "threatened" former finance minister Brian Lenihan with the immediate withdrawal of emergency liquidity funding unless he accepted the bailout last November, it has been confirmed.

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In interviews conducted for The Inside story of the demise of Fianna Fail, published today, it has emerged that Mr Lenihan, in the days before he died, confided in a small number of colleagues how exactly Mr Trichet "bounced" Ireland into the bailout.

It was on his last day ever in the Dail, when he knew he was dying, that Mr Lenihan revealed the true sequence of events to a few of his party colleagues.

Just nine days before the official request was made on November 28, Mr Trichet sent Mr Lenihan a letter outlining his deep unhappiness over the amount of money that the ECB was "pouring into Ireland".

"The letter landed in the department on the Friday afternoon/Friday evening. Mr Trichet was deeply unhappy about the level of funding from the ECB into Ireland. There was incredible pressure and he insisted Ireland would need to accept a bailout," Mr Lenihan's former advisor Dr Alan Ahearne said.

"Two weeks before he died, we sat for coffee, and he told me that on the Friday evening (three days) before Dermot Ahern made his infamous 'fiction' remark, the ECB contacted him directly and threatened that if he did not request a bailout, they would cut off funding immediately to Ireland," former minister of state Billy Kelleher said.

It has also emerged for the first time that, two days later and the day before Dermot Ahern dismissed talk of a bailout as "fiction", senior banking officials from the Department of Finance met with ECB officials to discuss their "plans for Ireland".

"The ECB wanted to stuff the Irish banks with capital, overcapitalise them really, but it was clear that it would only happen if Ireland went into the bailout facility," Dr Ahearne added.

"Lenihan considered it a success to have kept the lights on and the ATMs functioning. He was under an enormous amount of pressure at the time," former defence minister Tony Killeen said.

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In his final interview before his death, Mr Lenihan revealed his personal hurt at what happened.

"I have a very vivid memory of going to Brussels on the final Monday and being on my own at the airport and looking at the snow gradually thawing and thinking to myself, 'This is terrible. No Irish minister has ever had to do this before'," he said.

"I had fought for two-and-a-half years to avoid this conclusion. I believed I had fought the good fight and taken every measure possible to delay such an eventuality and now hell was at the gates."

After the arrival of the IMF, an angry Dermot Ahern sought to set the record straight. Mr Ahern said "quite incredible pressure" was put on the country from the ECB.

Sunday Independent

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