Arthur Morgan (Louth, Sinn Fein)

I thank the Minister and his officials for the briefing they provided on the Bill. I have a problem with this legislation, although it is interesting. The legislation will take time to implement and will not be fully up and running until Christmas. Does this matter given that the Bill is academic? What counts is proper political accountability and oversight to ensure the various individuals in key positions are doing their jobs. The other critical element of the regulatory regime for the banking sector is the need to ensure these individuals are honest and accountable and possess a high degree of integrity.

I note that all the Fianna Fáil Party backbench Deputies who have spoken were critical of the former Financial Regulator, Mr. Patrick Neary, and a number of bankers who are no longer involved in the banks but did not criticise the bankers who are still in place. While they may have been critical in a general sense, they did not make specific criticism of the individuals running the banks. I wonder if an old boys' club is in operation or some form of convention is in place which prevents such criticism from being made.

To return to the critical issue of accountability, I believe bankers are not subject to any accountability. I will refer briefly to the example of Anglo Irish Bank, which is as good an example as any because there is not much difference between most of the banks. In December 2008, the Minister for Finance appointed two public interest directors, Mr. Frank Daly and Mr. Alan Dukes, to the board of Anglo Irish Bank. It is interesting to note how these two appointees performed in relation to their public interest responsibility. In February 2009, when Anglo Irish Bank published its accounts for 2008 we were all expecting them to reveal substantial losses at the bank. I was gobsmacked to learn that they showed a profit of €784 million and asked what was going on when an institution which had been nationalised just one month previously because it was on the rocks could make such a large profit. I also wondered whether the public interest directors would have something to say on the issue, particularly Mr. Daly who was chair of the bank's audit committee.

The truth emerged some months later when we were told the bank had €12.7 billion in losses. How did this come about? Why is it not considered a scandal that a supposedly accountable bank published incorrect accounts which were signed off by at least one of the public interest directors, Mr. Frank Daly? Under the heading, Books of Account, the 2008 annual report states: "The Directors are responsible for ensuring that proper books of account, as outlined in Section 202 of the Companies Act, 1990, are kept by the Bank." Under the heading, Going Concern, the report states: "The Directors confirm that they are satisfied that the Bank and the Group have adequate resources to continue to operate for the foreseeable future and are financially sound." The directors of the bank, specifically the public interest director, Frank Daly, signed off on these statements. Questions have not been asked about this. How were these figures arrived at? Why did the directors sign off on something about which they were not clear? Were they up to the job?

I will briefly run through the 2008 annual report. On page 22, it states: "The Directors present their report and the audited financial statements for the year ended 30 September 2008." The following page states: "The Directors are responsible for ensuring that proper books of account, as outlined in Section 202 of the Companies Act, 1990, are kept by the Bank." On page 24, the report states that the directors confirm that, to the best of their knowledge, the accounts give "a true and fair view of the state of affairs of the Bank and of the Group as at 30 September 2008." On page 27, the directors "acknowledge their overall responsibility for the Group's system of internal control and for reviewing its effectiveness." On the following page, as I noted, the report states: "The Directors confirm that they are satisfied that the Bank and the Group have adequate resources to continue to operate for the foreseeable future and are financially sound."

I wonder what was the view of the Minister for Finance when he received a copy of the 2008 accounts. My view is that they are not worth the paper they are written on yet there has not been an outcry. Let us imagine that Bord Gáis, Lloyds Bank, Barclays Bank or a similar institution published an annual report and accounts which later transpired to be totally false. The case to which I refer is an absolute scandal. Either the two public interest directors, Mr. Daly and Mr. Dukes but the former in particular, were up to the job or they were not. If the first scenario is the case, why did they not comment on the false accounts and refuse to sign them on the basis that something crazy was taking place? I am not referring to the shenanigans involving Seanie FitzPatrick, the money swilling in and out of Irish Life & Permanent or the case of Hypo-Bank Ireland. We know that what took place in those cases was wrong and gave rise to corporate enforcement issues. While I hope these issues will be addressed, progress has been slow. The issue of profit at Anglo Irish Bank was critical given that there may have potential buyers for the bank. What is being done about this issue?

At a time when pensioners were having their Christmas bonus cut, people on low wages had a levy imposed on their salaries and welfare recipients had their income cut, Frank Daly was appointed chair of the board of the National Management Asset Agency commencing in December last year. That was his reward for the manner in which he dealt with the issue I have raised. We also know that Alan Dukes is chairman designate of Anglo Irish Bank. As such, he was also kindly rewarded for his role in this matter.

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