Mr. John Corrigan:

I would like to comment generally in the first instance on the State Street transaction to put it in context. To be clear, what had happened was fraudulent in nature and totally unacceptable. That is the view of the commission which oversees the pension fund and also the view of the NTMA. We have communicated this view regarding the fraudulent nature of the transactions very clearly and in unequivocal terms to State Street. I have personally met the global vice chairman of State Street who came to Dublin to explain the circumstances and apologise for what had happened. Nonetheless, State Street, in its performance of this transaction, fell well below what was expected of it.

What happened, as the Deputy said, was that a decision was taken to liquidate a sizeable portfolio in connection with the recapitalisation of the banks. Again, as acknowledged in the Comptroller and Auditor General's statement, State Street was appointed from a panel of transition managers, managers who specialise in dealing with large transactions to ensure that in executing these transactions, the market does not move against them. By any definition, a sum of €4.7 billion is a big transaction and, as acknowledged in the Comptroller and Auditor General's report, it was clearly employed in an agency capacity. To be clear about it, an agent is somebody who is employed for a fee who takes no position in the matter and passes straight back to the client the sale proceeds if the transition involves a sale. In this case, fraudulently, within State Street, approximately 0.7% was clipped off the sale price when it went to the open market to transition the shares. To put it simply, if it realised €100 from a sale, only €99.30 would find its way back into the National Pensions Reserve Fund. This clipping applied not only to the fund but also to a number of other major clients which were being transitioned by State Street at the same time.

We received an invoice in the agreed amount from State Street and having verified that there was no commission charged, we paid the invoice. It became apparent in late 2011 that there was an issue with the transition management arrangements in State Street which wrote to us to notify us of the issue. We had already heard about it in press speculation and, in answer to the Deputy's question, then took it up with State Street.