Kieran O'Donnell (Limerick East, Fine Gael)

To take up from where I left off, I want to deal specifically with the issue of the €1.5 million which has been transferred into a pension fund for Mr. Richie Boucher of Bank of Ireland. I have no doubt the Minister of State, Deputy Martin Mansergh, is as disgusted as every other citizen at what has happened.

There are two public interest directors on the board of Bank of Ireland, Mr. Joe Walsh and Mr. Tom Considine. What needs to be put on the record by the Minister for Finance, Deputy Brian Lenihan, is what discussions he has had with the public interest directors in respect of this employment contract being agreed between the board of Bank of Ireland and Mr. Boucher. It does not comply with the requirements under the Credit Institutions (Financial Support) Act 2008 and the scheme that stemmed from that, the recapitalising of AIB Bank and Bank of Ireland or the review by the Covered Institutions Remuneration Oversight Committee.

The Minister has the power under sections 47, 48 and 49 of the Credit Institutions (Financial Support) Act 2008 to write to the board of Bank of Ireland to direct it to reverse this decision. It is unfair and contrary to legal requirements.

When did the Minister for Finance first become aware of this and did he approve it? The review carried out by the remuneration oversight committee states it did not have a remuneration plan in respect of Bank of Ireland. Discussions were ongoing with the financial regulator and it made specific reference in its findings to pensions and the need for controls in the area. It did not regard the pension allowance of €123,000 that Mr. Boucher got as acceptable. It felt the pension schemes should be in line with those of normal employees. There is a shortfall in the pension fund for general employees in the Bank of Ireland, meaning that many of them will have to wait until they are 68 to retire, unlike Mr. Boucher, who is able to retire at 55.

Mr. Boucher was appointed as the new CEO of Bank of Ireland on 25 February 2009 and the report of the oversight committee was published two days later. I did not think he should have been appointed because new CEOs were needed. Mr. Elderfield and Mr. Honan have come in from the outside and have proved to be of great benefit to the financial institutions of the State.

When this happened I asked how much Mr. Boucher would be paid and we were told his remuneration covered pension entitlements. I was told, however, that no package had been negotiated with Mr. Boucher. I considered it unusual that a CEO would be appointed before the details of his employment contract were in place. Clearly this was rushed, for one reason or another.

I was told then Bank of Ireland would negotiate the contract on the basis of the Covered Institution Remuneration Oversight Committee's findings. Its review clearly states that the pension cash allowance was a major problem and that there was a strong case for reviewing the pension arrangements that had been a feature of the remuneration of some senior executives in recent years. The committee said arrangements should be in line with normal pensions for ordinary bank staff. What happened? A package was put in place for Mr. Boucher that is completely at variance with all legislation and the Covered Institutions Remuneration Oversight Committee's report to the Minister on 27 February 2009.

The Minister has the power to act. The Taoiseach claims the Government can do nothing about this but nothing could be further from the truth. Under section 48 of the Credit Institutions (Financial Support) Act 2008, the practical result of the financial guarantee, when the Minister considers on the advice of the Covered Institutions Remuneration Oversight Committee that the covered institution has not complied with the requirements of the section, he may direct the covered institution to amend the remuneration plan so compliance is achieved. It was done for the non-executive director of AIB Bank so why is the same not being done with the Bank of Ireland? People are entitled to know. It is a fudge to say it is about a pension scheme. An employment contract was negotiated by Mr. Boucher and Bank of Ireland that completely ignored the legislation underpinning the guarantee scheme and the Covered Institutions Remuneration Oversight Committee.

The fitness and probity aspect of the Bill is welcome. It has been clearly acknowledged by the Government that it failed when the Central Bank was responsible for the promotion of the financial services industry and the IFSC. That was contrary to proper regulation. There is provision for "living wills" for banks, so bond holders instead of taxpayers will have to pick up the tab, with consumer protection being the responsibility of one body. Fine Gael opposed the plans for regulation and consumer protection in 2002 when the original legislation was introduced.

The CEO of the Irish stock exchange appeared before an Oireachtas committee recently and she stated contracts for difference should have the same disclosure requirements as any other share dealings. If that measure had been in place in recent years, no one person would have been able to build up a 25% stake in Anglo Irish Bank under the cover of contracts for difference.

We must have proper regulation. We have tabled an amendment that simply calls for proper investigation, consistent with what we said when the Central Bank Bill was introduced in 2002, so we can see what is needed. This Bill attempts to change the financial architecture but that might be unnecessary. There should be a proper oversight process within the Oireachtas for appointments to the Central Bank commission, its board and every other office. The new commission should have banking resolution powers to deal with that issue.

The credit union movement has been great, it has not had the same problems as the banking system. On Committee Stage we must ensure it can continue to function in a prudent way. It is not in the same situation as the banks. The reckless lending of the banks has led to taxpayers picking up the tab, many of them holders of credit union accounts. Many small businesses would have gone out of business without the support of the credit union movement when the banks have let them down.

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