Pearse Doherty (Donegal South West, Sinn Fein)

During the last Dáil, when Fianna Fáil tried to rush legislation through, there were loud protests from both Fine Gael and Labour and rightly so. It is unfortunate that despite all the promises of new politics and parliamentary reform from his party during the general election, the Minister is seeking to rush through this important legislation and this is not good enough. Good legislation requires good scrutiny and good scrutiny requires the allocation of adequate time to prepare, question, debate and amend what is put before us. When any Government attempts to railroad through legislation one must ask why the parliamentary process is being denied and why there is not adequate time to ensure the proposal is an appropriate and proportionate response to the issue at hand.

The cynic in me is always suspicious that the intention of the Government is to avoid scrutiny for fear of what it may reveal. This is particularly the case when it comes to the out-workings of the placing into administration of Quinn Insurance by the Financial Regulator.

A fortnight ago, Senators were given less than two days to read and absorb this Bill, all Stages being taken in a single session. Having read the Official Report of the Seanad debate, it is clear that no Senator felt able to comment adequately on or support the Bill.

The Government has proceeded with this legislation in an unacceptable and deeply undemocratic way. The treatment of the Dáil is little better. Amendments were to be submitted before the Second Stage debate had even taken place, a demand that is both procedurally inappropriate and politically unacceptable. When one considers the financial implications for the taxpayer and for hundreds of thousands of insurance policyholders across the State, this cavalier approach by the Minister to the parliamentary process is outrageous.

It has been widely reported in the media, and referred to by the Taoiseach and the Minister today, that the Minister is under pressure from Liberty Mutual and Anglo Irish Bank to ensure this Bill is fully enacted by 4 October, in advance of a High Court appearance by Liberty Mutual and Anglo Irish Bank to close the sale of Quinn Insurance. This is a reckless way to treat legislative process and it is certain to result in bad law and a bad result.

The entire Quinn Insurance saga is littered with bad practice and questionable behaviour. My colleague from Cavan-Monaghan, Deputy Caoimhghín Ó Caoláin, will deal with this matter in more detail during his contribution. However, I wish to place on record Sinn Féin's view that serious questions need to be answered regarding the way in which the Government, the Financial Regulator and the administrators have handled the issue of Quinn Insurance. Already, some 1,000 jobs have been lost in a region of the country with a history of high unemployment. These jobs were lost on the watch of the Financial Regulator and his appointed administrators. There is a need for a short public inquiry into the manner in which both the administrators and the Financial Regulator behaved, if we are to ensure any level of public confidence in the outcome of this saga.

This Bill raises more questions than it answers and at this stage, Sinn Féin is not in a position to support it. Sinn Féin is not, in principle, against amending the current shape and size of the insurance compensation fund and nor are we, in principle, against the imposition of a levy on all insurance risk in the State in order to fund future requirements. However, in determining whether to support this Bill, it is important to understand the background to its drafting. Following the placing of Quinn Insurance Limited into administration by the Financial Regulator negotiations between representatives of the administrator and the US insurance giant, Liberty Mutual and Anglo Irish Bank, commenced. The sale of Quinn Insurance has been agreed in principle and will be subject to a High Court hearing on 4 October. If the sale of Quinn Insurance to Liberty Mutual and Anglo Irish Bank proceeds, the insurance company will be split into two entities. The first entity, comprising of the Irish policy book of the company, will continue as an ongoing concern run by Liberty and Anglo.

The second entity, comprising of the policies held in the North of Ireland and Britain will be administered by Liberty Mutual but funded with a payment of up to €720 million from the insurance compensation fund. The fund will pay the policyholders who are outside the State. The request for this money was made by the administrators to the Central Bank. However, as the compensation fund currently only contains €40 million, the Government is proposing changes to its size and operation to meet the request by the administrators. Officially €720 million - this figure may increase - is to cover payments on policies to customers of Quinn Insurance in the North of Ireland and Britain. However, like so many aspects of this story, things are not that clear. It appears that assets from Quinn Insurance of more than €400 million were used as security against loans for the same value from Anglo Irish Bank for other commercial activities pursued by the company. As a result, bondholders with Anglo Irish Bank effectively have a hold on this portion of Quinn Insurance's insurance book. Liberty Mutual, seeing this as a liability, is insisting that the Government and the insurance compensation fund fill the gap. Happy to oblige, the Government is seeking to place a 2% levy on all non-life insurance policy holders in Ireland to fund the capital requirements of Quinn Insurance.

In order for the Anglo Irish bond holders to relinquish their claim on the €400 million of assets at Quinn Insurance, they have been offered a pay-off of €200 million. Put another way, €200 million of the €720 million requested by the administrator will effectively be used to pay off senior bondholders in Anglo Irish Bank, after the compensation fund moneys are lodged and become part of the general assets of the company. As the compensation fund currently only holds €40 million and the proposals in front of us to day will only raise €65 million a year, the Government proposes to advance €400 million, of money it must borrow from the EU and IMF, over the next two years plus a market interest rate to the compensation fund. At no stage, even up to now, has a rationale been provided to this House for the request for these funds or a justification as to why the Minister is acceding to this request.

Why is this money not being provided by Liberty Mutual as part of the purchase of Quinn Insurance? Why are the Government and the directors of Anglo Irish Bank not exploring burden-sharing, if not outright burning of the bondholders in Anglo who have a hold over the assets of Quinn Insurance? Why are taxpayers and, ultimately, insurance policy holders being asked to foot the bill to pay off senior bondholders who lent recklessly to Anglo Irish Bank, which in turn lent recklessly to Quinn? No matter what sophisticated financial semantics are used to describe this sorry affair, it is hard to see it as anything other than yet another bailout by the public to a toxic bank, its bondholders and a major US insurance company. If this is not the case, then the Minister has a responsibility to outline in fine detail why this money is required and why the only source of this money is the taxpayer and policy holders with other insurance providers? There is no guarantee in any of this that €720 million will be the maximum drawdown required as a result of the Liberty Mutual-Anglo Irish purchase of Quinn Insurance. Nor is there any guarantee that the State will recoup the entire €400 million cash it will advance in 2011 and 2012.

I am also concerned about the involvement of Anglo Irish Bank in all of this. Like most people, I understand that Anglo Irish Bank is no longer a trading bank, but an empty shell holding and servicing its toxic debts. Can the Minister explain the involvement of Anglo Irish Bank in this enterprise and why, as I understand it, the bank will retain a 24.5% share in the company after it is sold to Liberty Mutual? I am also unclear as to the impact of the technical changes to the insurance compensation fund. The legislation proposes to apply a 2% levy on all non-life insurance policies in the State. However, if my reading of the Bill is correct, only companies with 70% or more of their business in the State could apply to the compensation fund while in administration. What level of risk does this represent to policy holders with companies that have less than 70% of their business in the State? Why does the Bill provide cover for all policy holders in the State if their provider goes into liquidation, yet restricts access to the compensation fund to only certain providers if in administration? It is important that there is clarity on this matter as those who will be contributing to the fund through the new 2% levy have a right to know whether they will be able to benefit if their provider goes into administration.

In addition, while we are being told that the increased contributions to the compensation fund are to cover future eventualities in the insurance industry, the reality is that the first €720 million will be used to repay the State and cover directly the requirements in Quinn Insurance. This means that for anything up to ten or 11 years, the compensation fund will not be in a position to service any other insurance company that faces difficulties. This means that policy holders with other insurance providers will have to pay an additional 2% on their premium for the next ten years, during which time they will have no protection via the compensation fund if their provider falls into difficulty.

I want to repeat once again that the way the Minister has brought this legislation to the House is deeply unsatisfactory. Both the origin of the legislation and its content beg a litany of questions which must be answered before the legislation passes into law. Worse that this, however, is that the Minister is trying to present what is nothing more than a bank bailout under the cover of a measure that he says is designed to protect ordinary policy holders. Some would say that this is downright dishonest.

Sinn Féin will support any Bill that protects policy holders in Quinn Insurance or any other insurance provider. At a time of great economic uncertainty and volatility, people have a right to know that their policies are protected to the greatest degree possible. Sinn Féin will also support any Bill that protects the employees and policy holders at Quinn Insurance. However, we are not opposed to the sale of Quinn Insurance if all other options have been carefully assessed and shown to be without merit. Nor are we opposed to the reform of the insurance compensation fund, as long as it meets these crucial objectives. However, what the Minister has put in front of us today does not deserve support from any Member of this House. On that basis, Sinn Féin will oppose the legislation, unless serious amendments are made to it on Committee Stage. However, given the truncating of the debate, I understand that will not be permitted and that only approximately an hour will be provided for Committee Stage.

There are genuine questions that need to be answered. They have not been answered in the Seanad nor in the Minister's opening remarks. There is a lack of knowledge within these Chambers and outside as to what is happening and as to the untold story of the bondholder that has a part of the Quinn asset book. Basically, that bondholder is being paid off, using our money. This is money that will be borrowed by the EU-IMF to pay off the bondholder, but will be recouped through applying a 2% levy on every person with an insurance policy, other than a health policy, in this State. That is unacceptable.

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