Sunday 24 September 2017

Michael Noonan: 'ECB threat letter will be released'

Trichet ultimatum that forced us into bailout left Lenihan with 'no option' says Noonan

DANIEL McCONNELL CHIEF REPORTER

Finance Minister Michael Noonan has said a secret "threatening" letter from the European Central Bank to his predecessor Brian Lenihan, which forced Ireland into the troika bailout in 2010, should now be released.



The letter has to date remained top secret and both the Department of Finance and the ECB have repeatedly refused to make it public.

Now Mr Noonan has said he favours it being made available, putting him on a potential collision course with the ECB, which is adamant that it remain "strictly confidential".

The controversial letter from the then ECB president Jean Claude Trichet to Mr Lenihan dated November 19, 2010, is said to have threatened the withdrawal of emergency liquidity assistance (ELA) to Ireland if the then government refused to accept the bailout, that included a ban on burning bondholders.

In the past two weeks, there has been growing pressure from within the Government, the opposition and leading economists to have his department release the contents of the letter.



Speaking exclusively to the Sunday Independent yesterday, Mr Noonan said that he had seen the "very direct" letter which left Mr Lenihan with "little or no option" but to admit defeat and lead Ireland into the €85bn troika programme.

It is now beyond doubt that Mr Lenihan was threatened directly by Mr Trichet, and that Ireland was bounced into the troika programme by unelected officials at the ECB.

Mr Noonan said he had no authority to order the release of the letter, given the decision of the Freedom of Information unit in his department to withhold it.

"The FoI unit is totally separate from the political side of the department, and it was decided that this letter was not releasable."

But Mr Noonan, who returns to his office on Monday from his holidays, has said that the letter should be made available to whatever banking inquiry is established by the Government in the coming months.

"The banking inquiry that has been signalled to me seems like an appropriate place to release this letter, which I'm sure would be very helpful to it," Mr Noonan said.

Since he has taken office, Mr Noonan has repeatedly spoken of Mr Trichet's politeness, but said yesterday that there was never any movement from him on the issue of burning bondholders.

Mr Noonan said the implication was always there that the emergency liquidity extended to Ireland's banks would be pulled if any move on bondholders was made unilaterally.

The Sunday Independent has previously been refused a request for a copy of the letter from Mr Trichet by the Department of Finance on "confidentiality grounds".

In turn, the ECB has also refused to release the letter.

In its explanation to an Irish journalist earlier this year for refusing to release it, ECB boss Mario Draghi said: "The letter. . . is a strictly confidential communication between the ECB president and the Irish Minister of Finance and concerns measures addressing the extraordinarily severe and difficult situation of the Irish financial sector."

However, since the issue has been raised in recent weeks by UCD economists Karl Whelan and Colm McCarthy, pressure has been building for its release.

Last Wednesday on TV3, Communications Minister Pat Rabbitte said he was "unaware" of the existence of this letter before now, but agreed in principle that it should be made public.

Speaking this weekend, other senior Labour figures have joined the calls for the controversial letter to be made public, with many saying the pending banking inquiry is the "appropriate forum" for its release.

"We have been pushing very hard for the banking inquiry and it is precisely to allow information like this to come out.

"We are very keen that this comes out," said one senior Labour figure this weekend.

The letter was sent on November 19, 2010, from Mr Trichet to Mr Lenihan, just nine days before the white flag was finally hoisted.

In his last major interview before his death, Mr Lenihan told a BBC documentary that the ECB had threatened him both verbally and by correspondence about what would happen if he refused.

"Hell was at the gates," he said, and he made clear that the ECB believed that Ireland "needed to be nailed down".

According to Dr Alan Ahearne, Mr Lenihan's former adviser, 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," he told the Sunday Independent.

"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.

But Mr Lenihan, on his last-ever day in Leinster House, told a small number of his Fianna Fail colleagues how forceful the threats from Mr Trichet were.

"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.

Mr Kelleher also said this weekend that it was simply outrageous that an unelected official can behave in such a fashion with a sovereign government.

He has also called for the letter now to be released.

Sunday Independent

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