Dáil debates
Wednesday, 18 February 2009
Leaders' Questions
10:30 am
Enda Kenny (Mayo, Fine Gael)
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We are worse off than we were yesterday. What is at stake is the liquidity and independence of the Irish banking system and our country's finances. Yesterday's news did not do us any good; we are worse off politically and economically than when we asked questions in the House yesterday.
When the Taoiseach was elected, I respected and believed his call that he would work hard and make his decisions in the interests of the Irish public. The Irish public is not being served by what is happening now, nor is Ireland's interest. The Government that the Taoiseach leads has been far too timid about the situation in our financial institutions. The finger can be pointed at the Government for a lack of oversight, real regulation and activity as our country edges ever nearer to further economic depression. The Green Party — whose Ministers are not in the Chamber again this morning — will bleat in the distance for resignations and action, but the posteriors of its Ministers are super glued to their seats at Cabinet.
Yesterday I asked the Taoiseach when he was informed of the transactions between Anglo Irish Bank and Irish Life & Permanent. I asked him if he was aware that any member of the Cabinet in any way encouraged, was associated with, or supported that activity. The Taoiseach did not answer that question. On 29 September, when the Taoiseach discussed the offloading of shares in respect of the Quinn position, was he not aware how this would be financed? Did he ask questions about this? The Taoiseach is aware that section 60 of the Companies Act 1963 makes it illegal to transfer shares in this manner, except in certain circumstances. Does the Taoiseach agree there was a fraud perpetrated on the Irish Stock Exchange?
When did the Taoiseach find out about these transactions? Was any member of his Government in any way associated with this? Why did the Taoiseach not ask questions about how the transaction in respect of Mr. Quinn was to be financed?
Brian Cowen (Laois-Offaly, Fianna Fail)
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I reject the Deputy's contention. I also reject the idea that he does not wish to impugn my integrity when he has been putting out statements that impugn my integrity. I would rather Deputy Kenny desisted from that sort of hypocrisy.
Enda Kenny (Mayo, Fine Gael)
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I will withdraw any remark about the Taoiseach's personal integrity. I would never do that and never have in my 33 years in politics.
Dermot Ahern (Louth, Fianna Fail)
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Deputy Kenny is talking out of both sides of his mouth.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Kenny did it as recently as last night, never mind his 32 years in politics.
John O'Donoghue (Kerry South, Ceann Comhairle)
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The Taoiseach, without interruption, please.
Dermot Ahern (Louth, Fianna Fail)
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He gets others to do it for him.
Enda Kenny (Mayo, Fine Gael)
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When did I impugn the personal integrity of the Taoiseach?
Alan Shatter (Dublin South, Fine Gael)
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It has more to do with confidence.
Enda Kenny (Mayo, Fine Gael)
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The Taoiseach should explain his statement or withdraw it.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The briefing he gave suggested I am protecting people, and I do not even know who they are.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Kenny put his point and now I will put my point.
Enda Kenny (Mayo, Fine Gael)
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I challenge the Taoiseach on where I impugned his personal integrity. The Taoiseach should explain it or withdraw it.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I will make my points.
Enda Kenny (Mayo, Fine Gael)
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When did I impugn the personal integrity of the Taoiseach?
Enda Kenny (Mayo, Fine Gael)
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He will not answer that question either.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have answered that question. It was a preliminary remark, and I want to get to the heart of the matter.
Brian Cowen (Laois-Offaly, Fianna Fail)
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What is suggested in the briefing by Deputy Kenny and his people is that I am protecting someone. I am not protecting anyone but the Irish taxpayer and the Irish national interest. That is my sole concern.
Enda Kenny (Mayo, Fine Gael)
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I have never impugned the integrity of the Taoiseach.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I hold no brief for anyone other than those people because they are the people I serve.
Michael Creed (Cork North West, Fine Gael)
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The Taoiseach is incompetent and asleep at the wheel.
Enda Kenny (Mayo, Fine Gael)
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I have never impugned the integrity of the Taoiseach, nor any member of his Government, unlike the Taoiseach. He should deal with the issue.
Seán Barrett (Dún Laoghaire, Fine Gael)
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The Taoiseach should read the relevant line.
Dermot Ahern (Louth, Fianna Fail)
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Deputy Kenny is at it all the time.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Kenny can be listened to in silence but I cannot be listened to in silence, is that it?
Billy Timmins (Wicklow, Fine Gael)
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Deputies O'Dea and Ahern spoke out.
Brian Cowen (Laois-Offaly, Fianna Fail)
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One of the points raised by the Deputy was whether the Ministers in the Taoiseach's Cabinet entourage supported a €300 million deal with select golden circle customers of Anglo Irish Bank. We were not involved with this, it was an internal bank matter. It had nothing to do with members of Government or any parties in the Government.
Bernard Durkan (Kildare North, Fine Gael)
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The Government rushed in to save the banks.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I am entitled to reply to the question, Deputy Durkan. Of course, the old tactic is that if one throws enough muck some of it might stick. That is one of the reasons Fine Gael is so often on that rather than this side of the House.
Bernard Durkan (Kildare North, Fine Gael)
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If the Taoiseach is lucky, he is heading this way fast.
John O'Donoghue (Kerry South, Ceann Comhairle)
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Allow the Taoiseach to finish.
Brian Cowen (Laois-Offaly, Fianna Fail)
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It is the old tactic. I want to make it clear to Deputy Kenny that every decision taken by this Government in respect of trying to handle a difficult financial crisis has been in the interest of the taxpayer and in the public interest, and in the interest of no one else. The Deputy asked about 29 September but there was no discussion on 29 September on those matters. What was being discussed at that time was the fact that we were facing the possible collapse of the Irish financial and banking system unless the Government was prepared to provide a guarantee to that system. That is what we did. In doing so we provided greater stability to the system.
Alan Shatter (Dublin South, Fine Gael)
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What did the Government know in July?
John O'Donoghue (Kerry South, Ceann Comhairle)
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This is Leaders' Questions in which the Deputy has no involvement.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have made it abundantly clear that far from seeking to protect anybody, which is the nice juvenile conspiracy theory the Opposition has been going around with for the last three weeks——
Bernard Durkan (Kildare North, Fine Gael)
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We will tell the Taoiseach.
Brian Cowen (Laois-Offaly, Fianna Fail)
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It is not over the top.
Brian Cowen (Laois-Offaly, Fianna Fail)
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One can take so much of that nonsense.
John O'Donoghue (Kerry South, Ceann Comhairle)
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The Taoiseach must answer. Deputy Kenny will have another chance.
Brian Cowen (Laois-Offaly, Fianna Fail)
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This Government has been seeking to——
John O'Donoghue (Kerry South, Ceann Comhairle)
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Please allow the Taoiseach to finish.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I did not interrupt the Deputy. As a result of the due diligence undertaken on behalf of the Department of Finance, questions were referred to the Financial Regulator, which are now being investigated by the statutory authorities concerned. This suggestion of protection——
Enda Kenny (Mayo, Fine Gael)
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The Financial Regulator could investigate itself.
Brian Cowen (Laois-Offaly, Fianna Fail)
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——is totally baseless. It is wrong, contemptuous and has no basis in fact. It is a political slur and smear campaign——
Willie O'Dea (Limerick East, Fianna Fail)
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Hear, hear. Those are the facts.
Brian Cowen (Laois-Offaly, Fianna Fail)
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——in an effort for the Opposition to capitalise on difficulties that currently exist——
Bernard Durkan (Kildare North, Fine Gael)
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That is due diligence all right. The Government would not recognise it anyway.
Brian Cowen (Laois-Offaly, Fianna Fail)
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——in the financial system to see if it can get some cynical political advantage.
Brian Cowen (Laois-Offaly, Fianna Fail)
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That is precisely the game the Opposition is involved in. Let me tell the Irish people what I am trying to do.
Bernard Durkan (Kildare North, Fine Gael)
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The Taoiseach is apparently the standing judge.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I am trying to achieve two things. I am trying to ensure the principle of accountability applies for anybody involved in any wrongdoing whatsoever, in this bank or any other.
Joan Burton (Dublin West, Labour)
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The Government has failed in that anyway.
Paul Connaughton Snr (Galway East, Fine Gael)
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The Taoiseach should read the files.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The only way in which that principle of accountability can be achieved is to respect due process. The one way to ensure that people with far more resources than the Deputy or I can avoid accountability is by not respecting due process.
Paul Kehoe (Wexford, Fine Gael)
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The Taoiseach's predecessor spoke with some passion too.
Brian Cowen (Laois-Offaly, Fianna Fail)
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It is fundamental to trying to get to the bottom of this problem. One of the ways we can ensure confidence in our system, externally as well as internally, is to confirm that those who have the independent statutory authority to investigate these matters are doing so. As far as I and the Government are concerned, recognising their independence, they cannot come to a conclusion soon enough. Whatever facts must be dealt with or whatever further processes must be instigated can then be initiated. Let us be clear that this is the motivation of Government in respect of that matter.
Richard Bruton (Dublin North Central, Fine Gael)
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The Government is asleep at the wheel.
Paul Connaughton Snr (Galway East, Fine Gael)
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If the Government is in——
Brian Cowen (Laois-Offaly, Fianna Fail)
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In respect of the other matter, which is of equal importance——
John O'Donoghue (Kerry South, Ceann Comhairle)
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Allow the Taoiseach to finish.
Brian Cowen (Laois-Offaly, Fianna Fail)
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——in terms of the leadership that must be displayed in the country and this House, it is true to say that our financial system, like others, is under continual stress. The credit crunch and the ability to access markets and credit remains a challenge facing this system now more than ever. I hold absolutely no brief for anyone who would besmirch the reputation or integrity of Irish banking domestically or internationally because of the difficulties it brings, exacerbating an already difficult position.
Pádraic McCormack (Galway West, Fine Gael)
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If the Taoiseach acts, we will support him.
Brian Cowen (Laois-Offaly, Fianna Fail)
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Those are the two principles upon which we are seeking to deal with these matters. There is no other motivation or reason. I reject with contempt any suggestion that I am in the business of seeking to protect anybody or do something in that respect. It is really about the Opposition seeking political advantage.
James Reilly (Dublin North, Fine Gael)
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There are sins of omission as well as commission.
Alan Shatter (Dublin South, Fine Gael)
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Tell us who are the ten musketeers.
Enda Kenny (Mayo, Fine Gael)
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The charges being made by the Taoiseach are beneath his office but typical of him. It is not the first time he has rejected questions, comments and proposals with contempt.
John Cregan (Limerick West, Fianna Fail)
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That came from the Deputy's press office.
Enda Kenny (Mayo, Fine Gael)
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It is not the first time the Taoiseach has descended into casting aspersions on other people's judgment capacity. I am glad the Taoiseach has accepted that I did not impugn his personal integrity. I will follow up with some of the questions he did not answer.
When the Taoiseach was told of the Quinn shareholding being sorted out, did he not ask why it was so?
Enda Kenny (Mayo, Fine Gael)
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Is it not a fact that the Government was in possession of information two months before it was prepared to put €1.5 billion into Anglo Irish Bank, when one could certainly say there was fraudulent activity going on? The Government was quite prepared to put €1.5 billion of taxpayers' money into it.
Enda Kenny (Mayo, Fine Gael)
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The Government knew about this when discussions were taking place. The Taoiseach might confirm the report that the transaction of the €300 million — not to a golden circle but a toxic circle — was overseen by a British finance house. Is that true? If that was the case, was the Financial Regulator and Central Bank in possession of all the information in determining whether the transaction was legal?
I do not know any of these people and the Taoiseach has told me he does not know any of them either.
Willie O'Dea (Limerick East, Fianna Fail)
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Does the Deputy accept that?
Enda Kenny (Mayo, Fine Gael)
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I accept that. Who in heaven's name made a decision not to pursue these ten people for €75 million owed to the Irish taxpayer?
Enda Kenny (Mayo, Fine Gael)
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That is what they were liable for. Last year in the budget, for the sake of €100 million, 20,000 elderly people protested on the streets outside this House.
Enda Kenny (Mayo, Fine Gael)
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People are now walking into offices who have 22% of a surcharge on personal overdrafts by the same banks we guarantee.
Paul Connaughton Snr (Galway East, Fine Gael)
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The lot of them.
Enda Kenny (Mayo, Fine Gael)
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There is a chasm of anger out there. The Taoiseach is in a position to do something and send out a message both nationally and internationally that a change of direction is taking place in Irish banking and financial institutions, in which we now have no trust or confidence.
Who made the decision not to pursue the ten members of the so-called golden circle? Is the Government not going to go after these people? I listened to the chairperson of the Green Party this morning on the radio. When the Minister for Finance, Deputy Brian Lenihan, came in to speak about nationalisation of the bank, he referred to the concealment of loans to directors, the scale of those loans and the damage done to the reputation of Anglo Irish Bank and Irish banking in general. We were told the Government would go after those loans to balance those books.
Enda Kenny (Mayo, Fine Gael)
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If a decision has been taken not to pursue these ten persons, that will not happen either. The Government states one thing with regard to nationalisation, while in possession of those facts, yet it does not act.
Was this transaction overseen by a British finance house? Was the Financial Regulator, the Central Bank and, therefore, the Government fully informed as to what was going on? Who made the decision and why has a decision been made not to pursue the ten persons in respect of the €300 million overhang from Quinn? What action will the Government take to send out a message internationally that this country is a good place to do business and banking?
The Government cannot do this unless it shifts persons in the boards and management structure. There are good people in all our banks. It is nothing personal but the message is all wrong. The Taoiseach is in office but not in charge.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I am very much in charge of this in comparison to the game being played by the Opposition.
John O'Donoghue (Kerry South, Ceann Comhairle)
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Allow the Taoiseach to answer the questions.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I will answer all the questions. The Opposition stated only a couple of weeks ago——
John O'Donoghue (Kerry South, Ceann Comhairle)
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I must insist——
Brian Cowen (Laois-Offaly, Fianna Fail)
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Are we to have a discussion or a shouting match?
John O'Donoghue (Kerry South, Ceann Comhairle)
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——on silence for the Taoiseach. Deputy Kenny was listened to in silence and the same respect must be afforded to the Taoiseach.
John O'Donoghue (Kerry South, Ceann Comhairle)
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This is a democratic forum.
John O'Donoghue (Kerry South, Ceann Comhairle)
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Some questions have been asked and the Taoiseach is entitled to reply without interruption. Please allow him to do so.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I thank the Ceann Comhairle. There were a number of issues to which I wanted to respond. Deputy Kenny spoke about the need to be responsible and is worried about our international reputation. I heard him saying in this House only two weeks ago that our banks were bust. That was a nice statement from the Leader of the Opposition.
Bernard Durkan (Kildare North, Fine Gael)
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One could make the same point today.
Brian Cowen (Laois-Offaly, Fianna Fail)
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On the specific matters he asked about, I heard in comments this morning that the Cabinet had made some decision to ensure people were not pursued in respect of any liabilities they may have. Nothing could be further from the truth; the Cabinet made no such decision and it is not our business to make such a decision. We have nationalised a bank, which is now in the ownership of the people, so it can pursue, to the greatest extent it possibly can, all liability and debts due to it. That was the purpose of nationalising it.
If it were the case that we had not nationalised the bank and if the loss of market confidence was such that it could not maintain its deposits and it went into default, the taxpayer would have had to pick up the tab.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The reason we have nationalised the bank is to ensure the bank functions and we retrieve whatever debts are due to it to the greatest possible extent in respect of any transaction in the bank. We made it clear that the management and board of the bank will do so according to normal banking practice. They will not be interfered with on a day to day basis by this or any other Government that would have enough sense to know how that should proceed. That is another canard that has been thrown out as part of the rumour machine we must contend with.
I have made the point clearly that in respect of the proposed recapitalisation at the time, in the statement we made on 23 December, on Anglo Irish Bank we were talking about taking a 75% stake in the bank to provide capital of up to €1.5 billion to it. Upon deciding that, with the loss of market confidence being such and the governance issues that were arising, we said we would have to nationalise the bank because there was no market confidence in its ability to continue under those structures. We nationalised the bank; we have not put money into it yet but we stand ready to support it.
That is the decision we made and it is at great variance with the suggestion we made about the recapitalisation of the other two banks at that time, a €2 billion capital injection plus €1 billion underwriting that would be supported by the Government in return for a 25% share if the private capital was not raised. It is a totally different transaction, taking into account the very different situation for Anglo Irish Bank compared to the other two main banks.
The Minister for Finance has indicated that we regard regulatory reform as a priority and that we must proceed with it to change the structure, how we provide regulation and its type. That is a challenge not only for this jurisdiction, but for every jurisdiction that must face this financial crisis. This is not unique to Ireland, although I am not suggesting in any way that is a factor. We must ensure, on the basis of the facts before us, that we have a new regulatory regime.
On this question of the transaction undertaken by these individuals to help to unwind the CFDs that had been built up in the Quinn stake in the bank, the issues that are arising now on that arose because of a due diligence undertaken, I again emphasise, by people acting on behalf of Government. If the contention now is being made that in some way we nationalised a bank to protect people——
Brian Cowen (Laois-Offaly, Fianna Fail)
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——it is nonsense because those debts are owed by those people to the bank and to the greatest extent that they can be collected——
Enda Kenny (Mayo, Fine Gael)
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Not even Fianna Fáil could dream that one up.
Brian Cowen (Laois-Offaly, Fianna Fail)
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——under the terms and conditions of that they remain owing and we intend that the management and board will collect those debts——
Brian Cowen (Laois-Offaly, Fianna Fail)
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——to the greatest extent it is possible to do so under the terms and conditions of what was brought forward.
Alan Shatter (Dublin South, Fine Gael)
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What did the Government know last July?
Brian Cowen (Laois-Offaly, Fianna Fail)
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The contention being made is absolutely wrong. Let me emphasise again, Anglo Irish Bank was nationalised for the good——
Brian Cowen (Laois-Offaly, Fianna Fail)
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——of the country. If it is being contended by those who would not even support the guarantee, let alone the recapitalisation of the banks, that we should allow that bank to default, clearly the situation would have been a greater liability for the taxpayer. We need to make sure Anglo Irish Bank gets on with its business, including the repayment of debts due to it.
Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach stated yesterday that he did not know the identity of the ten wealthy investors who constituted the golden circle in Anglo Irish Bank. Has he found out who the ten are since? When will he find out and when will he tell us? We must be told because the people own this bank and we are stuck with the €300 million they gambled recklessly. The golden circle must be named.
The Taoiseach made an interesting statement yesterday. He told us that he, the Department of Finance, when he was Minister, and the regulator became of aware of what he called the "overhang" of the Quinn interest in Anglo Irish Bank in March 2008 and that they concluded it was a source of instability in the bank. That overhang was assembled by the Quinn group using a method known as contracts for difference, an arrangement whereby the person does not buy the shares, he or she effectively gambles on them, buying an interest in whether they go up or down. Why would someone use contracts for difference to acquire an interest in a bank or other body rather than buying the shares? One reason is that contracts for difference have a different tax treatment from the purchase of shares. Stamp duty is payable on shares whereas contracts for difference are not liable for stamp duty.
The Revenue Commissioners rumbled this back in 2006. On St. Patrick's Day 2006, the Revenue Commissioners issued a compliance notice to the effect that contracts for difference would have to be subject to stamp duty. Within days, the Taoiseach, as Minister for Finance, caused the Revenue Commissioners to reverse that decision and to withdraw the compliance notice. He did so after being lobbied. We know he was lobbied because in reply to questions from Deputy Burton and Deputy Rabbitte shortly after that, he acknowledged that he was lobbied. The day after the compliance notice was withdrawn, the shares in Anglo Irish Bank increased by €0.30 and 3.7 million shares in Anglo Irish Bank were traded.
Will the Taoiseach tell the House who lobbied him in March 2006, causing him to direct the Revenue Commissioners to withdraw the compliance notice days after it had issued? This caused a situation to continue whereby trading in contracts for difference without tax liability continued, resulting in the overhang of Quinn shares in Anglo Irish Bank, among other things, which has now led to what the Taoiseach referred to yesterday as the instability in Anglo Irish Bank and all of the consequences that have flown with it, with the disastrous results for our banking system and economy.
Brian Cowen (Laois-Offaly, Fianna Fail)
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It is unfortunate that in asking a question about 2006, Deputy Gilmore did not give me some prior notice. I cannot give him the accurate information immediately, but I will get it for him as soon as I can now that he has mentioned it here. If he had wanted an accurate answer to that, he could have put me on notice to it and I would certainly have provided it.
Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach was Minister for Finance at the time.
Brian Cowen (Laois-Offaly, Fianna Fail)
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It was 2006 but I will get the information; I have no problem with that. I recall, however, that the decision on those matters also followed official advice.
Joan Burton (Dublin West, Labour)
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The Taoiseach, as Minister for Finance, made the Revenue Commissioners withdraw the compliance notice.
John O'Donoghue (Kerry South, Ceann Comhairle)
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Deputy Burton is not entitled to interfere in Leaders' Questions.
Joan Burton (Dublin West, Labour)
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I am helping the Taoiseach in his recollection.
John O'Donoghue (Kerry South, Ceann Comhairle)
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The Deputy is not entitled to interfere.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I will get the full explanation from the Department of Finance and will supply it to the Deputy in public in case there is any suggestion that I did something untoward or at someone's behest. I did nothing at anyone's behest; I did it on the basis of official advice on a matter which was having an effect on the trading of shares. That is my general recollection of 2006 but I will get the details and supply them. There is no mystery to this.
On the question of obtaining names, I have made the point — others can say differently if they wish — that the matter is currently being investigated by the Office of Corporate Enforcement and the regulator. It relates to a commercial deal done internally in a bank between the bank and its customers or investors. I do not have the details of that transaction. The independent statutory authority, acting independently, is dealing with that. If I went down to Fitzgibbon Street in the morning——
Róisín Shortall (Dublin North West, Labour)
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It did not act independently. It took Anglo Irish Bank's advice.
11:00 am
Brian Cowen (Laois-Offaly, Fianna Fail)
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——and asked the sergeant in charge to give me the names of the suspects in crimes A, B or C which he or she was investigating, I would not be entitled to that either. It is in the interests of due process and of ensuring the objective everyone has is achieved, which is to see if there was any wrongdoing in regard to these matters and that if there was wrongdoing, those who did wrong will have to answer for it under the law without fear or favour. That is my only motivation in regard to this matter. I have no other motivation. While I will perhaps have to put up with the smear obviously going around as a result of it, I want to make it very clear that this Government holds no brief for any individual, that it expects everyone to be treated equally before the law——
Pádraic McCormack (Galway West, Fine Gael)
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That is a big change.
Brian Cowen (Laois-Offaly, Fianna Fail)
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——and that we have confidence in those investigating the matter, in particular in regard to the Office of the Director of Corporate Enforcement, who has the statutory authority on the basis of that examination to appoint a High Court inspector and to proceed. If that is his requirement and he includes two members of the Garda from the fraud squad in his staff, he will proceed with that with the full support of Government. That is the situation.
I am not prepared to do what has been suggested to me because it may, in some way, put that at risk and not because I hold any brief for anybody or for who they are, what they are or who they eventually emerge to be. That is not my motivation. I have no interest in any of that.
I am simply trying to ensure the process of investigation is concluded as quickly as possible. I ask that it is concluded as quickly as possible and that the decisions which flow from it are proceeded with. We hold no brief for anyone. The law should affect everyone without fear or favour whatever way that turns.
In regard to the other matter, I am also very cognisant — this is something the Deputy and the Fine Gael Party will know from detailed briefings with the Minister for Finance — that we are in a situation where we want to maintain stability in our financial system and ensure our financial system remains stable. That is a very great challenge in the present circumstances.
I say to people who quite rightly, as I do, wish to see emphasis placed on proper oversight, proper supervision and proper outcomes to any wrongdoing that has taken place, let us please keep our eye on the big picture too, which is to ensure at the same time, and not at its expense, that our financial system continues to operate in a way that helps to serve the economy.
Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach said he will provide the information to me in regard to what happened in 2006. I remind him that the information I seek is the identity of those who lobbied him in 2006 to cause him within days to reverse the decision by the Revenue Commissioners to issue notices of compliance for contracts for difference.
Brian Cowen (Laois-Offaly, Fianna Fail)
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My recollection is that it was a professional body but I will check it.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have nothing to hide anyway.
Eamon Gilmore (Dún Laoghaire, Labour)
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I am not so sure that it is of such insignificance that it has entirely escaped the Taoiseach's mind because of what a commentator, whom I wish to quote, said at the time. John McManus, writing in the business opinion section in The Irish Times on 3 April 2006 days after the decision was made, stated:
The idea that the Minister for Finance should actually condone favourable tax treatment of this type of investment over plain vanilla share buying is hard to defend.
And the fact that between 20 and 50 per cent of the trades done in Dublin are done via CFDs should actually set the alarm bells ringing in Merrion Street. The Department should be asking themselves what will happen to all these leveraged investors when the inevitable down turn in the market comes.
That was very prescient because now we know what has happened to all those investors and to the banks now that the downturn has come. The overhang of Quinn shares in Anglo Irish Bank, which the Minister described yesterday as causing instability in the bank, brought about a situation where that bank ended up having to be nationalised, where our entire banking system has been put at risk, where repeated efforts have had to be made to restore confidence in it and where tens of thousands of people in our economy are losing their jobs as a result of a lack of credit being extended to them and as a result of what is happening in banking and the economy. That is the consequence of it.
That is what the Taoiseach was being warned about by this commentator in 2006. It was also what he was being warned about by Deputy Burton in 2006 when she raised this very issue with him. The Taoiseach this morning and Ministers put on media over the past few days are trying to spin the line that something untoward was going on in the banks, that they discovered it only lately, that they are trying to sort it out and that this is the Government acting tough with the banks. The fact of the matter is that the Taoiseach's stewardship, as Minister for Finance, has contributed to the hole we are now in economically. The Taoiseach was at the heart of it.
The Revenue Commissioners decided these things should be taxed. Up to 40% or 50% of transactions were being done in this way. It was a form of gambling. These people were taking risks and gambling with the economy and shares. Why would they not do so? They did not have to pay tax on it. No stamp duty was being imposed. If they had to buy the shares, they would have had to pay the stamp duty. The Revenue Commissioners said they should have done so but the Taoiseach responded to lobbying from somewhere about which he has yet to tell us which reversed the Revenue Commissioners' decision and they carried on partying, as Charlie McCreevy would say. Now we know the result. The banks and the economy are in trouble and the Taoiseach was the Minister for Finance charged with the stewardship of this. At the very least, he was unwise in the decisions he made and, at worst, he was not doing his job.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The reason Anglo Irish Bank got into difficulty is that the business model it had required obtaining borrowings——
Róisín Shortall (Dublin North West, Labour)
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Answer the question asked.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy's leader has had a chance to speak for ten minutes.
Róisín Shortall (Dublin North West, Labour)
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Answer the question asked.
Brian Cowen (Laois-Offaly, Fianna Fail)
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If the Deputy does not mind me saying a few words——
John O'Donoghue (Kerry South, Ceann Comhairle)
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The Taoiseach must be allowed to answer.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I am entitled to answer and to defend myself.
John O'Donoghue (Kerry South, Ceann Comhairle)
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The Taoiseach must be allowed to answer.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The suggestion that we have a financial crisis in Ireland because of the CFD position is really stretching things.
Joan Burton (Dublin West, Labour)
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We have one in Anglo Irish Bank.
John O'Donoghue (Kerry South, Ceann Comhairle)
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Deputy Burton has no involvement in this.
Seán Sherlock (Cork East, Labour)
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The market was betting against Anglo Irish Bank.
John O'Donoghue (Kerry South, Ceann Comhairle)
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The leader of Deputy Sherlock's party is capable of asking questions. He does not have to help.
Michael Kennedy (Dublin North, Fianna Fail)
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I wish he would ask a question.
Brian Cowen (Laois-Offaly, Fianna Fail)
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In regard to what happened in Anglo Irish Bank, the problem was that the international credit crunch brought about a situation where its business model came under immediate pressure and the market made a decision on that. Its perceived exposure on the construction side was regarded as another negative but the idea that it was just in regard to the CFD issue is stretching things considerably.
I said that the acquiring of a shareholding by Mr. Quinn through the CFD mechanism was causing concern and was referred to me by the Governor in his normal meetings with me as Minister for Finance, which are conducted on a regular basis, and was unwound through 15% of shares being converted to shares for Mr. Quinn and his family. The other 10% then arose in regard to this other arrangement which is now under investigation by the regulator.
That source of instability was dealt with in July but, unfortunately, what we are now finding out is that the nature of the transaction in regard to the shareholding made up of the investors which was referred to the regulator has now been referred to the Office of the Director of Corporate Enforcement. It has to be dealt with to see whether it was a commercial loan conducted in the ordinary course of business. There are indications that perhaps that may not be the case. That issue has to be resolved by the Office of the Director of Corporate Enforcement.
However, to make the leap the Deputy just made that the CFD issue has caused all this problem in the banking system is totally exaggerating the case.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The source of instability which that created was being resolved. Deputy Kenny has suggested that the ultimate amount involved could be of the order of €300 million, but the problems in Anglo Irish Bank were far greater than that. While it is a very large figure, in the context of overall banking stability it will not have the impact suggested by the Deputy. It would be better for us to keep things in perspective. The issue here was——
Róisín Shortall (Dublin North West, Labour)
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It would be better if the Taoiseach answered the question.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I have answered the question. The contention of Deputy Gilmore was that the CFD position of itself has brought about a situation——
Brian Cowen (Laois-Offaly, Fianna Fail)
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He made that contention very clearly and the record will show what he had to say.
Róisín Shortall (Dublin North West, Labour)
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The Taoiseach should account for his stewardship.
Brian Cowen (Laois-Offaly, Fianna Fail)
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I did not interrupt when he was making his comments.
John O'Donoghue (Kerry South, Ceann Comhairle)
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The Taoiseach, without interruption.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The CFD position is not the reason we have a financial crisis in Ireland and if that is the contention, it is wrong.
Róisín Shortall (Dublin North West, Labour)
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It was a major factor.
Brian Cowen (Laois-Offaly, Fianna Fail)
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The truth is that was not the situation.
James Reilly (Dublin North, Fine Gael)
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Did it help the situation?
Brian Cowen (Laois-Offaly, Fianna Fail)
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Of course it did not help the situation, but that source of instability was dealt with in July and August through the mechanism we have just been discussing. However, the problem now is that an aspect of the nature of that transaction is under investigation. Those are the facts with regard to the CFD position and the unwinding of the shareholding by Quinn in that bank with regard to that matter. It is an exaggeration to associate with us and CFDs the rest of the problems of the economy, including the international recession and the depreciation in sterling.