Billy Kelleher (Cork North Central, Fianna Fail)

The net effect of Deputy Varadkar's amendment is to delete the original as well as my proposed amended version of section 41(6) of the Companies Act 1990, a subsection that exempts companies that are licensed banks from the requirements that apply to companies in general to disclose in annual accounts prescribed details about loans made to directors and persons connected with these directors. Section 8(1)(a) of the new Bill substitutes a new section for section 41(6) of the 1990 Act and differentiates between the positions of directors and persons connected to directors as follows. For the directors, the net effect of the substitution is that, from now on, any company licensed as a bank will be required to disclose in its annual account details all loans to individual directors where these exceed a minimum level, as referred to by Deputy Penrose. This will be the case where the loans are on ordinary or favourable terms. For those connected to directors, details of their loans will continue to be exempt under section 41 from disclosure in the annual accounts. However, the latter sections of Part 3 of the Companies Act 1990, as amended by the current Bill, will require aggregate disclosures in the accounts about loans to connected persons and detailed disclosures through a register and a statement that must be made available prior to the AGM of the licensed bank in question. In both instances, disclosures about connected persons will only relate to loans made on favourable terms.

If accepted, Deputy Varadkar's amendment would lead to detailed disclosure in the annual accounts of all loans above the minimum amount, not only to directors but to persons connected to directors of the institution. It would not apply only to preferential or favourable term loans but to any loans made to a person connected to a director. We must be conscious of the right of ordinary people to go about their business in privacy as long as they are not in breach of legislation. I encourage Deputy Varadkar to re-examine this.

According to Deputy Varadkar's amendment, all loans would have to be declared by people connected to directors. I am married to a bank manager but let us suppose she was promoted to the position of director of the bank. One may also have a brother, a sister or a spouse appointed as a director of a bank. In such cases all loans to the person would have to be disclosed. That is a fundamental infringement of the right of someone to go about business that is not anything other than legal. Favourable term loans must be put on a register, which is available to the Financial Regulator. The Financial Regulator already has authority through the Acts of the Oireachtas to insist on disclosure of loans if he deems it necessary.

I understand why Deputy Varadkar is pursuing this because of the circumstances that arose in a bank that is now nationalised. To put it in perspective, the Minister for Finance is the representative of the Irish people as a shareholder of Anglo Irish Bank. He has the authority to publish material and the Financial Regulator has authority to inspect and ensure that no favouritism is granted to directors or shareholders of Anglo Irish Bank, or in this case the Minister for Finance. Apart from the fact that it is unnecessary, there are many other reasons this amendment cannot be accepted. We have discussed the matter on numerous occasions. I could go into the detail of it but the general principle is that individuals related or connected to directors and lawfully going about their business in acquiring a loan from licensed banking institutions in this State should not be exposed to any further vigilance, as long as they are in compliance with laws and there is no favouritism shown.

I urge the Deputy to accept our bona fides in respect of the review of financial regulation in this country, as has been announced by the Minister for Finance. The Central Bank commission has been appointed. We are examining other areas of financial regulation to ensure strong corporate governance and enforcement of corporate governance in the context of finance.

Deputy Penrose is correct, one wants regulation appropriate to the risks involved. A knee-jerk reaction can have unanticipated results. If this amendment were accepted, it would have unintended consequences and would be a flagrant infringement on the right of an individual to go about his or her business. Deputy Varadkar should not pursue this and should accept our genuine belief that the Financial Regulator already has the necessary authority and power vested in him by the Houses of the Oireachtas in legislation. The register must be filled and is available for inspection by the Financial Regulator at all times. There is a severe penalty in regard to breaches and, equally and as important, the Financial Regulator can make regulation requiring publication of such loans if he or she so wishes.

There are plenty of safeguards and these will be enforced. Ordinary people should not be penalised because they may be related, possibly even without consent. It is blatantly wrong to put them at a disadvantage. If this were any other piece of legislation, I am sure those opposite would have very serious views on this issue of somebody being penalised because of a relationship with somebody in a position like that.

See this speech in context