Mary Lou McDonald (Dublin Central, Sinn Fein)

It is only now, when the limitations and jeopardies of membership of the euro are clear, that we are having this discussion. When Professor Nyberg makes reference in his report to group-think and to the herd mentality he is referring to that phenomenon. Given that the incoming Administration is largely pursuing the same path as the previous one, which it so heavily criticised, we are not out of the woods yet with regard to the group-think phenomenon.

I agree with previous speakers that the report tells us nothing new. I am also conscious, as we debate this matter, that people outside the Dáil are sick and tired of rehearing the story of the failures of governance, regulation and political and professional leadership. They are doubly sickened by the fact that taxpayers, homeowners and those who are now struggling carry the burden of this catastrophe.

I will focus my remarks on chapter 3 of the Nyberg report, which deals with the role of external auditors of the banks prior to and in the immediate aftermath of the banking guarantee. The report notes that all of the banks covered by the guarantee received unqualified audit reports throughout this period; therefore, the question that arises is, why did the banks require State support in 2008 so soon after each of them had received an unqualified audit report from various auditing firms? The report does not offer a definitive conclusion on this question. It does point out that the ongoing recapitalisation of the guaranteed banks by the State has protected external auditors from legal challenges, which are commonly mounted by liquidators against auditors when businesses collapse soon after clean audit reports.

The report's reference to "the extent to which large parts of Irish society were willing to let the good times roll on until the very last minute" will stick in the craw of families throughout this country struggling to keep their heads above water. Let us be clear. There is a very particular section of society who chose to let the good times roll. I mean by that the political classes and definable sections of the professional classes. Fianna Fáil and the Greens, like Governments across the OECD, bought into a policy consensus that believed long-term growth should be based on deregulation of domestic and international banking. Government actively incentivised people to invest in financial speculation rather than in the real economy. Fine Gael were and still are part of that consensus

Auditors gave clean bills of health to banks that most would have believed were insolvent. Ernst & Young was paid €1 million each year for the nine years prior to the bank guarantee for auditing the accounts of Anglo Irish Bank. It is worth noting that just last week the formers auditors of Anglo took a High Court challenge to halt an inquiry by the Chartered Accountants Regulatory Board into the firm's role in auditing the bank's books. In 2009 Ernst & Young also declined an invitation to come before an Oireachtas committee hearing on Anglo Irish Bank.

On 20 Feb 2009, after Anglo Irish Bank had been nationalised and five months after the bank guarantee, the 2008 accounts for Anglo Irish Bank were published and Ernst & Young presented its audit report. The report was clean and unqualified and stated that Anglo Irish Bank had made a profit of €784 million in the year to 30 Sept 2008.

Let us consider this. In September 2007 the issue of sub-prime lending first raised its head in the United States. On St. Patrick's Day 2008 the share price in Anglo Irish Bank dropped like a stone. In July 2008 the former Taoiseach met Seán FitzPatrick in Druids Glen. In September 2008 Lehman Brothers collapsed in the United States and on 29 September 2008 the now infamous Government guarantee was conceived and born. In the months that followed we heard the reports of the window dressing with Irish Life & Permanent, the golden circle and the concealed loans to directors. Despite all of the above, the auditors accepted the view of the directors that this bank was profitable and solvent. They had a bad debt provision of just 2% of the loan book. It stretches all credibility. The professional auditors could not see how misleading these accounts were. That was then and this is now. Now there is a question for the Minister for Finance as the sole shareholder acting on behalf of the State. Will the Government take action in respect of the auditing firms who clearly played a disastrous role in this crisis? The people want accountability.

The conclusions of the Nyberg report on the role of external auditors also point up specific gaps in the law. In the absence of an express requirement for auditors to have a challenging dialogue with the banking sector on its business models and growing property and funding exposures, many culpable accountancy firms will use whatever gaps they can find in the law to dodge their accountability. The legal, accounting, banking and political classes continue to be protected with no individual or sector properly held to account for what is the worst recession in the history of the State. Funding of public expenditure will be cut year on year as a direct result of the actions of sections of what I call the political and professional classes, those who inflated the property bubble, availed of unsustainable wholesale market funding to line their own pockets and now leave the unemployed, the low paid, middle-income families, PAYE workers and rural Ireland to pick up the tab.

The troika and the Government continue to protect a small cabal by refusing to restructure the banks' unsustainable debt. I will finish by asking a second question. Will the Government tell the House what contracts have been awarded to auditing firms by the State or State bodies such as NAMA since the banking crisis? Are any of the auditing firms linked to our failed banks still on the Government's payroll? The Government needs to tell us. Sinn Féin Deputies Caoimhghín Ó Caoláin and Arthur Morgan, questioned the then Minister for Finance, Deputy Brian Lenihan, on numerous occasions about the continued use by the State of auditors linked to the banking crisis. The former Minister would not answer their questions. I hope the Government and the Minister will do so.

Mention was made of public ire and the demand for crucifixions. No crucifixions are required but what people want is accountability and to see individuals brought to book. They also want a new approach and that is what they voted for not so long ago. I have put two specific questions to the Minister for Finance and await his responses.

See this speech in context