Joan Burton (Dublin West, Labour)

A finance committee was not included in the original structure. The National Asset Management Agency will have to operate on commercial business grounds. Given that finance and budgetary plans are the core of a business, it would be highly unusual not to have the full board involved in these areas. Audit, credit and risk management have specific, defined functions in banking. However, given the centrality of the finance function to everything NAMA will do, I do not understand the reason it is to be hived off.

Credit and risk management committees in a bank are to provide oversight to ensure detailed decisions on specific developers or groups of assets are taken in a manner which minimises risk and is sensible in terms of the objectives of NAMA. Finance is so pervasive to the entire activities of the agency that it is difficult to understand the reason it will be shunted into a sub-committee.

In most organisations, the chief executive has a group of people who help with the draft business plan. Does this mean that when the business plan is finalised, it will not go before the full board but will be presented to a sub-committee of the board? That would be bad practice. We should have learned from FÁS that removing central functions, other than those referred to, from the main committee will make the function of members of the main committee akin to that of flower pots. They will admire and be admired because they are not involved in intrinsic activities.

The section provides that two staff and two board members will be appointed it to the committee. I do not believe it provides for external members. Will Minister of State confirm that is the case?

What was the thinking behind this change because I am worried, given that the NAMA board will consist of senior executives, that finance matters will be dealt with by a sub-committee? This does not sound right because finance risks in a bank are normally dealt with by the credit and risk management committees, both of which are necessary. The audit committee is a standing feature of corporate governance. However, I do not get the business of establishing a finance committee. I would be worried if it meant the members of the main board have finance matters such as the business plan shunted from them.

The worst of all worlds is where a chief executive or chairman says the finance committee has already seen the information and a decision is nodded through. We are trying to escape from the mistakes made in board structures in that area. In many ways one could say Anglo Irish Bank, which was a good idea initially in terms of a developer's bank, was an institution which failed because it had an over-powerful chief executive who dictated everything that happened and came to believe he was infallible.

People who audit banks have done studies on collapses and have found a megalomaniac chief executive who founded the company often comes to believe his or her power is incredible. It is not a good idea to shunt critical financial matters away from the main board and put them before a sub-committee. This is not a situation whereby the Government has committees of Ministers going to and fro to find issues. This is the biggest property company ever created in this country and, perhaps, the world and it is proposed that the finance element of it will be dealt with by a small sub-committee. I am interested in hearing the reasons for this.

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