Kieran O'Donnell (Limerick East, Fine Gael)

This is the Central Bank Reform Bill 2010, to which we in Fine Gael tabled a reasonable amendment in the name of Deputy Bruton. The problem is that, since September 2008, we have been through a most horrific time in terms of the financial landscape, particularly banking. A proper investigation is required. Preliminary investigations are under way, but they will turn into a statutory inquiry at the end of May. However, the period covered by that inquiry should be extended to well beyond the end of September so as to provide us with a proper overall review through which we could see exactly what occurred. This Bill is purely about changing the chairs in the room. It is no fundamental reform. We need to know exactly how the situation was caused and how to ensure it never recurs. This is the last chance saloon and we must get it right.

I wish to revert to one of Deputy Edward O'Keeffe's points. The Minister can move on the €1.5 million payment into the pension plan of Bank of Ireland's CEO, Richie Boucher. In a question dated 3 December in which I asked the Minister about the remuneration plans for the covered institutions, he told me that "the Government considers the CIROC recommendations regarding remuneration of chief executives including bonuses, pensions, long term incentive plans, which includes stock options, are appropriate" and that any "deviation from this should be in exceptional circumstances" and with his agreement. This position has not changed.

Under section 48 of the Credit Institutions (Financial Support) Scheme 2008, the covered institutions were required to submit a plan to the covered institutions remuneration oversight committee, CIROC, within six weeks of 29 September 2008. CIROC was then required to report to the Minister for Finance within three months. The section states: "Where the Minister considers, on the advice of CIROC, that the covered institution has not complied with the requirements of this paragraph, he or she may direct the covered institution to amend the remuneration plan so that compliance is achieved." In its report, CIROC stated: "we feel that the Remuneration Plans need to be reviewed before we are in a position to assess meaningfully the extent to which they comply with the requirements of Paragraph 47 of the Scheme."

During the period in question, the banks would have supplied their initial remuneration plans sometime in November 2008. CIROC's report was presented to the Minister on 27 February 2009. On 11 February 2009 he announced that he was going to recapitalise AIB and Bank of Ireland and stated that the banks were seeking reductions in people's levels of remuneration and that the CIROC report was expected shortly. The report to which I refer states, in emphatic terms:

As we explained, the Plans need to be reviewed in the light of discussions with the Financial Regulator. We consider that revised Plans should also have regard to our comments in the following paragraphs ... There is a strong case also for reviewing the pension arrangements that have been a feature of the remuneration packages of some senior executives in recent years... We consider that pension arrangements for top management should be reviewed. We have become aware of a practice in which cash allowances were paid to compensate for the effects of the "pensions cap" [the €123,000 paid to Mr. Boucher]... Pension schemes should reflect public policy and tax law and it is unacceptable that arrangements should be put in place which would be inconsistent with the intent of the relevant legislation.

The latter is exactly what happened with Mr. Boucher. The report to which I refer also states: "In general, top management make little or no employee contribution for their pensions."

Did the Minister for Finance receive a revised remuneration plan from Bank of Ireland? Did he approve the €1.5 million top-up payment that was made to the pension plan of Richie Boucher, CEO of Bank of Ireland? Did he also approve the €123,000 payment provided to Mr. Boucher by way of a cash pension allowance? The latter payment is clearly not in compliance with the thrust of the legislation. In addition, it is clearly not in compliance with the recommendations of CIROC. If the Minister agrees with what Bank of Ireland has done, then he is going against the recommendations contained in CIROC's report. He made reference to that report in reply to a parliamentary question I tabled to him on 3 December 2009 when he stated that what was put forward in the review in the context of pension entitlements was appropriate and that "Any deviation from this should be in exceptional circumstances".

Did the Minister receive a plan and, if so, did he approve it? If he did not receive such a plan, then he should, under sections 48 and 50 of the Credit Institutions (Financial Support) Scheme 2008, write to Bank of Ireland in the immediate future and request that Mr. Boucher and the board reverse their decision, which is not in compliance with the legislation or with CIROC's recommendations. As already stated, CIROC indicated that "the Remuneration Plans need to be reviewed before we are in a position to assess meaningfully the extent to which they comply with the requirements of Paragraph 47 of the Scheme". It also recommended that this matter should be considered in the context of pensions. A pension allowance of €123,000 is clearly not in compliance with CIROC's recommendations, which the Minister stated were appropriate. Furthermore, Bank of Ireland and Richie Boucher should never have been allowed to enter into an agreement in respect of the pension top-up of €1.5 million.

There is a deficit in the pension fund of the ordinary employees of Bank of Ireland. Negotiations in respect of this deficit are ongoing and it has been stated that these individuals may be obliged to wait until they are 68 before they retire. Mr. Boucher can retire at 55 on a pension of €325,000 per year. That amount is nearly double the salary of the Minister for Finance. Something is fundamentally wrong here.

The Minister has responsibility for with enacting legislation. The Title to the Credit Institutions (Financial Support) Act 2008 states that it is "AN ACT TO PROVIDE, IN THE PUBLIC INTEREST, FOR MAINTAINING THE STABILITY OF THE FINANCIAL SYSTEM IN THE STATE". Richie Boucher has been given a pension top-up of €1.5 million and a cash pension allowance of €123,000, which will being his salary up to €623,000, a figure that is above the maximum of €500,000 recommended by the Minister. Such behaviour is not in the public interest and it is not in compliance with the Credit Institutions (Financial Support) Act 2008, the Credit Institutions (Financial Support) Scheme 2008 or the recommendations of CIROC. The Minister indicated in his reply to my parliamentary question of 3 December 2009 that those recommendations were appropriate.

I request that the Minister ensure that the decision in respect of this matter is reversed. In addition, he should outline when he first became aware of it and indicate whether he received a remuneration plan. If the Minister did receive such a plan, did he approve it? Does he accept that what has happened in the case of Mr. Boucher is not in compliance with the legislation?

We are considering how we can reform the way in which the regulatory system operates. In that context, I wish to comment on the back-to-back credit facility afforded to Anglo Irish Bank by a financial institution in Germany. Effectively, this facility amounted to manipulation of the markets. I am also interested in the back-to-back credit facility afforded to Anglo Irish Bank by Irish Life & Permanent, which allowed the former to present a deposit from the latter as a customer deposit in order to boost its balance sheet.

Over 40 bankers in the US have been imprisoned as a result of their actions. Not a single banker in this country has been incarcerated. When I use the term "bankers", I am referring to the top corporate executives and not to ordinary bank employees. The latter were, invariably, prudent in their dealings and were informed that if they were not involved in sales, then their careers would suffer.

The Minister for Finance stated that NAMA is winning the respect of the public. That is not the case. People realise exactly what NAMA will involve, namely, and at a minimum, €43 billion of their money. NAMA will have consequences for several generations of people in this country in the context of the level of public expenditure that will be required to finance its operations.

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