Sunday 25 August 2019

TD loses appeal over issuing of €31bn of 'IOUs'

Lost appeal: Joan Collins
Lost appeal: Joan Collins

Tim Healy

Independent TD Joan Collins has lost her Supreme Court appeal over the Finance Minister's issuing of €31bn promissory notes in 2009 for Anglo Irish Bank and other financial institutions.

The six judge court unanimously rejected the TD's core argument the minister had no power, under the 2008 law authorising him to issue the notes, to allocated unlimited sums of public money without those first being quantified and considered by the Oireachtas.

The Credit Institutions (Financial Support) Act 2008 was enacted with the aim of averting a banking collapse.

The notes were essentially 'IOUs' from the State to ensure continuation of Central Bank funding for Anglo, Irish Nationwide Building Society (INBS) and Educational Building Society (EBS) after the bank guarantee of September 2008.

Anglo and INBS were later nationalised and, after their successor in title, Irish Bank Resolution Corporation (IBRC), was wound up in 2013, the Anglo note, on which €25bn was then outstanding, was converted into long-term Irish government bonds.

Giving the court's judgment, Ms Justice Susan Denham, said the 2008 Act was "undoubtedly exceptional" but was "a permissible constitutional response to an exceptional situation". While the Act did not include a cap on the financial support, the Constitution did not require, either expressly or by implication, such a limit, she held.

The Constitution required the functions conferred by it upon the organs of State must be exercised by the appropriate organ, "and no one else", and only in the manner prescribed by the Constitution.

In the "extraordinary circumstances" that were the backdrop to the 2008 Act, it was permissible to confer such power on the minister and there was no constitutionally impermissible transfer of power of expenditure from the Oireachtas to the Government.

However, while it was unlikely the Oireachtas would concede such "wide ranging power" in less pressing circumstances, if a minister or other body was permitted to provide unlimited financial support without a limit in time or object to another commercial entity, it would not follow from this case that was constitutionally permissible.

In this case, the State's potential exposure as a result of the notes was "enormous", the amount involved was "vast" and the impact on the State's finances "significant", she said.

Those factors did not render the Act unconstitutional if it was designed to meet an "exceptional" situation, addressing "an extraordinary risk" to the State's economy, she said.

It was entirely conceivable the crisis which might be faced might require provision of unlimited financial support, by guarantee or otherwise. If there had to be a cap on the support, that would be a severe limitation on the Oireachtas' power and the court did not accept the Oireachtas was so constrained.

Irish Independent

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