Thursday 22 February 2018

ECB was consulted on bank guarantee scheme

Letter to department told of governing body's concerns

Emmet Oliver and Dearbhail McDonald

THE European Central Bank (ECB) was consulted in the critical days leading up to the controversial 2008 banking guarantee as the Government struggled with Ireland's burgeoning financial crisis

It has emerged for the first time that the Office of the Attorney General (AGO) wrote to the Department of Finance just four days before the Government decided to introduce the controversial blanket guarantee.


The letter from the AGO was issued to officials in the Department of Finance to brief them on issues arising from consultations with the European Central Bank (ECB).

The ECB has a role to guard the financial stability of the eurozone and a guarantee like Ireland's would have had widespread ramifications.

The correspondence regard- ing the ECB consultation has been supplied to the Dail's Public Accounts Committee (PAC) but legal privilege or confid- entiality has been asserted over the document as it contains advice from the AGO.

The letter is one of 50 confidential documents, which include legal concerns by the AGO over the state-aid implications of a system-wide bank guarantee, which have been notified to the PAC.

The schedule of documents also reveal that Taoiseach Brian Cowen was being briefed about developments in the financial markets as far back as April 2008, shortly before the former Tanaiste and finance minister assumed the role of Taoiseach.

The PAC, which acknowledges that confidentiality attaches to Cabinet and AGO material as well as certain documents that contain sensitive commercial information about individual banks, has now asked the secretary general of the Department of Finance, Kevin Cardiff, to waive privilege over the correspondence or key questions that triggered advices from the AGO.

Fine Gael TD Bernard Allen, chairman of the PAC, said that he believed that copies of the letters containing the questions which prompted the advice from the Attorney General should be made freely available to the committee to help gain a clearer picture of events leading up to the banking guarantee.

"We need to know what the catalysts were for the decision to introduce the guarantee," said Mr Allen.


"In this regard we are very much dependent on the good will of the department and we are unhappy that privilege was asserted over certain documents and letters."

The schedule of 50 key documents that have been withheld from the PAC include advices from Attorney General Paul Gallagher on the legal issues arising from Financial Stability Contingency Planning, draft discussion documents prepared by Goldman Sachs regarding strategic options and the state aid implications of the guarantee.

Irish Independent

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