Scathing report on banking collapse points finger at Dept of Finance
THE Department of Finance has been lashed in an unpublished report compiled by the Dail's Public Accounts Committee (PAC). A draft of the report into the banking crisis has now been sent to various organisations for comment, including the department.
While the banks themselves and the regulator are criticised, the draft report reserves some of the most scathing criticism for the Department of Finance's mistakes. It concludes that the department failed in three major areas: lack of qualified staff; the creation of an environment where people do not challenge one another; and a failure to judge systemic risk.
Chapter four of the report is particularly critical of the department and once again raises the question of whether it is fit for purpose.
The draft report contains nine key recommendations, including: the streamlining of the organisations that investigate financial crime; new laws to ban reckless trading and give the Central Bank the power to place a financial-services firms into administration; giving the PAC powers to compel people to attend its hearings, even if they have retired from a company or bank; higher pay in the Central Bank to prevent highly trained staff from leaving.
The Department of Finance rejected requests from the PAC for records and files while the report was being written. Officials said that they did not want to prejudice a future inquiry by releasing further records to the PAC.
While the Wright report into the crisis concluded that the Department of Finance was "fit for purpose", other analysts believe that it contributed to the collapse.
Former National Treasury Management Agency chief executive Michael Somers said in a 2011 interview that the department wasn't "fit for purpose" and did not function. He added that the department was insular and needed fresh input from outside to make it work again.
"I would have to say, I wouldn't have been too impressed with what went on in the Department of Finance," Mr Somers said in an interview with Ivan Yates on Newstalk. He continued: "It's not that they are bad people or anything like that but there's something in the woodwork there that just doesn't seem to function.
"If you are sitting in the Department of Finance -- and I know this because I was there myself -- if you sit there and do your grind and move files from the in-tray to the out-tray, you don't really learn a lot and you don't bring very much to the party.
"There's no cross-fertilisation, they tend to keep to themselves, they wouldn't be particularly courted by outside organisations and I think if you are going to do something about it, as they do in other countries, you bring in people from outside."
Peter Nyberg, a Finnish government official, who also wrote a report three years ago on the origins of the crisis in Ireland, said recently that he saw no reason for a new Oireachtas inquiry into the matter.
Mr Nyberg carried out a nine-month investigation into the Irish banking sector, which was published in 2011.
The PAC report is separate to a planned Oireachtas inquiry, which will hold public hearings next year.