Saturday 20 January 2018

Lenihan was 'calm' hours before bank deal fiasco

Union leaders recall meeting gave no indication of approaching apocalypse

Normal day: Brian Lenihan
Normal day: Brian Lenihan

Roisin Burke

Minister for Finance Brian Lenihan was "calm," and not "preoccupied" in his final hours before entering the critical night when the State ended up bankrupting the country by blanket guaranteeing its banks, trade union leaders recall.

Speaking to the Sunday Independent, both union chiefs, David Begg and Jack O'Connor, who met with Lenihan at 5pm that day have no recollection either of any civil servants tipping him off that an apocalypse was coming that night.

On Monday evening September 29, 2008, O'Connor was en route to a meeting with Lenihan, running slightly late.

"I drove up Merrion Street as the five o'clock news came on," the ICTU president recalls. "The collapse in share price of Anglo and other banks was the lead item, so quite clearly things were imploding."

The next morning, Lenihan would issue the €400bn guarantee of the liabilities of all six Irish banks that would effectively bankrupt Ireland.

It might be imagined that the eve of this cataclysmic event would be a day filled with heated, urgent meetings to trash out how to rescue the country's banking system.

Incredibly, at this point in the evening, O'Connor and Begg were meeting with Lenihan for a routine pre-Budget submission confab.

"As far as noticing anything spectacularly different, I didn't," said O'Connor. "I often recall how calm the minister was."

Lenihan made a passing remark about the banks' tumbling stock prices, O'Connor remembers, but other than that it was a wholly routine event. "The meeting was conducted in a way that those meetings were always conducted with previous finance ministers."

It lasted around three-quarters of an hour, uninterrupted. Both men say that there was absolutely no sign of the build-up to the turmoil that was to come.

"It is amazing, I've often reflected on that since," says ICTU boss Begg, as he leafs through notes of the meeting that fateful day. "It was such a routine, normal meeting, with no indication at all of what was to transpire."

O'Connor and Begg were there that day to get their spake in for their members ahead of Budget 2009. It would end up being a slashathon, but they didn't know that yet. And a bloodbath of emergency Budgets would follow.

"He [Brian Lenihan] talked about the level of borrowing that was required that year – €16bn, and the National Development Plan, and about investment in Ireland. "He wasn't convinced about the effectiveness of capital gains tax, he said.

"We talked about worries about pensions and he agreed that government couldn't avoid addressing that question," says Begg, recalling the discussion, a prescient one considering the pension crisis grenades that are exploding all over the place now.

There was no bid to cut the meeting short to call the minister to attend to the small matter of one of the most defining economic decisions ever made in the history of the State.

"The meeting wasn't interrupted or anything," said Begg. "There were no civil servants whispering in his ear, he wasn't preoccupied with other problems, he was fully engaged," Begg recalls.

"I don't know whether you can deduce from that that the real seriousness of the problem hadn't yet been put to him and that it happened later that evening, or just that he's a very cool person."

"The meeting was the typical one that takes place every year where the various organisations and interest groups make submissions in advance of the budget," agreed O'Connor.

"I expect the Irish Creamery Milk Suppliers Association and the Vincent de Paul [both organisations were there for meetings earlier the same day] were there for the same reason," said O'Connor.

Five years later, we still don't know what happened after the unions and the Vincent de Paul and the Creamery association reps departed and the architecting of the bank guarantee began.

The State stays silent.

Irish Independent

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