Failed bank got all clear in report that cost State €7.4m
THE Government was lambasted in the Dail yesterday for paying €7.4m to Merrill Lynch for advice that the Anglo Irish was financially sound shortly before the bank was nationalised at great expense.
The Labour Party flaunted documents released under the Freedom of Information Act during the report and final stages of the NAMA bill.
The department paid €7.4m to Merrill Lynch to be told Anglo was "fundamentally sound" days before its nationalisation, said Labour's finance spokeswoman Joan Burton.
Senior officials then wrote to the European Commission to inform them that the bank was sound, but also said that it was a "niche" operator in the Irish market -- whereas the Finance Minister Brian Lenihan had defended its nationalisation on the grounds that it was of "systemic importance". "In a nutshell, this is why we need oversight," Ms Burton said.
Michael D Higgins TD said it was a disgraceful to describe the Anglo as being of "systemic importance" as it was no more systemic than a dandelion.
Mr Higgins added that NAMA would be paying €240m for expert advice every year when €7.4m had been wasted on Merrill Lynch's opinion that Anglo was sound when it patently was not and that it was a disastrous and overpriced decision to appoint the firm as advisers to the Department of Finance.
"That is why we need an oversight committee," he said.
Fine Gael finance spokesman Richard Bruton said it was important that a new Oireachtas oversight committee on NAMA had powers beyond existing watchdogs.
The committee should have expert advice from the office of the Comptroller and Auditor General which would have access to all NAMA papers, he said.
Ms Burton said the key lesson from history was that unless there were high levels of transparency and oversight, "the whole exercise is likely to prove a failure".
Banks were already "putting the thumbscrews" on small businesses around the country, she said.
Mr Lenihan replied that Anglo was "a systemic bank at the time of nationalisation" because it was a bank with a balance sheet of €100bn, including €50bn in deposits from 250,000 customers.
"The idea that the collapse of such an institution by a government would have no implications is utterly and totally fallacious," he said.