Enda Kenny (Mayo, Fine Gael)
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Since the House met last week, the banking situation has deteriorated. We have had the publication of the PricewaterhouseCoopers report, albeit a truncated version, and Anglo Irish Bank's end-of-year results. Around the country, there is grave concern because it is difficult to get a grasp of the full range of the issues involved.

This morning the Garda fraud squad was sent into the headquarters of Anglo Irish Bank, which is now State-owned. This sends out its own message. I am not going to be confrontational with the Taoiseach on what others consider to be petty points. This is, however, about the credibility of the country's financial institutions. This morning's Garda actions, which Deputy Charles Flanagan called for on several occasions, send out their own message.

I will put three simple questions to the Taoiseach. First, what new information has come to his attention since the nationalisation of Anglo Irish Bank which has triggered the sending in of the Garda? Second, has a direct instruction been given to all personnel, particularly senior personnel, in the now State-owned Anglo Irish Bank to co-operate fully with the ongoing investigation? Finally, arising from this morning's actions, how does the Government propose to rectify Ireland's international financial credibility with the international markets ?

Brian Cowen (Laois-Offaly, Fianna Fail)
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As the House is aware from news reports, this morning the Garda Bureau of Fraud Investigation was involved in an investigative operation in Anglo Irish Bank under the direction of the Director of Corporate Enforcement. Any such investigation is a matter for the Garda Síochána and the Office of the Director of Corporate Enforcement; the Government does not intervene in such investigations.

The following information has been made available by the Office of the Director of Corporate Enforcement, ODCE, in respect of the operation. A Garda officer seconded to the ODCE obtained a search warrant from a judge of the District Court yesterday. This warrant was executed today in accordance with the powers given to the director under section 20 of the Companies Act 1990, as amended. The search was led by Garda officers who are seconded to the ODCE. They were assisted by other officers attached to the Garda Bureau of Fraud Investigation and by ODCE staff. The purpose of a search under section 20 is to acquire books, documents and other materials which may provide evidence of or relating to one or more suspected offences under the Companies Acts. For operational reasons, the director will not be disclosing the suspected offence or offences in question, the premises searched or the name of the company to which the search relates. The director will be making no comment on the matter at this stage.

I have consistently made clear that the proper statutory bodies were investigating what occurred at Anglo Irish Bank and that the Government would do nothing to prejudice subsequent possible criminal or civil proceedings. We must allow this investigation. In that context, I do not wish to say anything which might prejudice future civil or criminal actions. It is important to stress that customer deposits are fully covered by the guarantee. When the bank was nationalised, it was made clear that it would continue to be run as a going concern. All Members have an obligation to aware of the damage that inaccurate and inflammatory statements or speculation can do to the levels of confidence shown in Ireland by international financial institutions.

The issues which arose during the due diligence process and which were referred to the Director of Corporate Enforcement are being investigated by him. It is the view of the chairman, board and management of Anglo Irish Bank that there should be full co-operation with the officers who have the statutory and independent authority to deal with this matter.

The signal which needs to be sent out is that this matter is being investigated by the requisite authorities and that it is being pursued; that any suggestions to the contrary last week or at any other time are without foundation; and that there is a necessity to ensure we proceed with the reform of regulatory structures in order to instil public confidence. The Minister for Finance has indicated that he intends to bring proposals in that regard before the Government in the near future. This will be extremely beneficial in ensuring that people understand that it is the view of everyone inside and outside the House that we should have a reputable and properly functioning system. That latter will ensure that the principle of accountability will apply and that, if appropriate, the full rigours of the law will be applied.

Enda Kenny (Mayo, Fine Gael)
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I thank the Taoiseach for his reply. Obviously, the Director of Corporate Enforcement is dealing with this matter in the context of possible infringements of the Companies Acts. The Fine Gael Party has a different view in respect of the investigation being carried out at Anglo Irish Bank and suggests that it should be done under the stewardship of the Director of Corporate Enforcement as distinct from the regulatory authority, which was part of the problem in the first instance.

The situation that has arisen has dealt another hammer blow to the credit worthiness of Ireland Inc. As the Taoiseach is aware, the markets do not actually care who owns this bank as long as credit worthiness is restored to our financial institutions. In that context, I differ from him in the sense that I am of the view that Anglo Irish Bank should have been wound down over a period, in an orderly fashion, as opposed to being allowed to operate as a going concern.

The world is running out of patience with Ireland Inc. As the Head of Government, the Taoiseach is in a position to take decisive action in order to attempt to rectify this problem before someone else rectifies it for us. We must start on the long, slow and painful path away from the economic precipice on which we now stand. The Taoiseach referred previously to bipartisanship, national consensus on issues and the offering of support in the national interest. These are sentiments with which anyone can agree. From my perspective, the message which must immediately be sent out to the international markets is that the Government is prepared to take decisive action and to look to the future in a way that will engender confidence among those who operate in those markets.

The difficulty which arises is that when people hear about the HSE, spin doctors and everything else, they become angry. Fine Gael has tabled a Private Members' motion for this evening in which are listed nine points which were carefully drawn up and which are constructive, progressive and realistic. Each in its turn will deal with an aspect of restoring credibility to Irish financial institutions. The points to which I refer relate mainly to the need to change the regulatory system, to replace the senior management and executives of both major banks and the regulatory authority, to examine the way in which top executives are remunerated — we suggest that a cap of €250,000 be imposed — and the possibility of employing the good bank-bad bank concept, which Fine Gael has been advocating for some time. These are among a number of issues in respect of which the Taoiseach could provide support in a bipartisan fashion.

In my view, and that of my party, the adoption of the nine points put forward in the motion will send out a signal to the international community to the effect that the Government is changing direction, is taking decisive action and is putting in place a structure that will restore the credibility of and trust and confidence in the Irish financial institutions. In light of the Taoiseach's views on bipartisanship, support in the national interest and support for Ireland Inc. — and given the fact that I recognise the gravity of the economic situation we face and am aware that the world is running out of patience — is he prepared to accept the proposals laid down in Fine Gael's Private Members' motion? Those proposals will be important in assisting, in part, with restoring the sense of credibility and trust that is vital to the future of our country. Is the Taoiseach, in the spirit of bipartisanship, prepared to accept suggestions that are constructive and progressive?

Brian Cowen (Laois-Offaly, Fianna Fail)
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In respect of the financial crisis, in recent months the Government outlined a strategy based on the need to supply a guarantee in respect of the banking system, such was the imminent threat upon it last September. This did not meet with unanimous approval in the House. However, it met with some approval and the Deputy's party supported that aspect of our strategy.

We then proceeded to ensure due diligence and a recapitalisation policy statement was issued. We took the time with which we were provided by the guarantee to assess the best way forward in respect of a recapitalisation policy. In that context, we were obliged to undertake discussions with the main banks concerned. In a statement issued before Christmas, we outlined our preparedness to make significant funds available for that purpose. On the basis of a proper risk assessment and detailed advice provided by experts employed by the Government for that purpose, we obtained the best assessment as to what the Government's commitment should be in the context of a recapitalisation of the two main banks. We proceeded to recapitalise these banks, which did not meet with unanimous approval in the House. I understand that when the relevant vote was taken, the recapitalisation was opposed by all of the Government's opponents in the House.

Having carried out the recapitalisation, we stated that we would proceed to try to assess the best way to manage the risks that will emerge in the coming years. We made it clear that this is our next step and the Minister for Finance, his advisers and the authorities under the aegis of his Department are undertaking work in this regard.

In the interim, many statements were made in the House which were inaccurate and incorrect and which made a difficult situation even worse. We are in a battle for this country's economic stability and nobody should underestimate the scale of the challenge we face.

In respect of our management of this financial issue, while it is open to all Members of the House to give their views and scrutinise Government action, as recently as last week accusations were being thrown about here that there was some ulterior motive behind Government action in this matter. This is totally contrary to the facts and not a shred of evidence has been provided since then to substantiate these accusations, particularly the political charges that were made. These were most unfortunate and do not go without notice elsewhere.

Shane McEntee (Meath East, Fine Gael)
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The Government was too slow. It should have acted six months ago.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The bottom line is that we are seeking to pursue this matter in the best way possible and in the national interest for the purpose of trying to restore financial stability to the system as soon as possible. As I stated, this is an ongoing challenge.

On the economic issue, the Government has proceeded through its budgets and through raising more than €2 billion from taxation in 2009. Further savings were made in 2008, with full year effect in 2009 and, since then, based on a framework agreed with the social partners, we have announced the need for a €2 billion saving to be identified immediately in the interest of maintaining and upholding credibility with international markets regarding the determination of the Government to seek to start to address the serious problem which has emerged in the public finances. This did not meet with agreement in the House and continues to be opposed.

From the Government's point of view, we would welcome any support that would be forthcoming from the Opposition. However, in respect of every issue we have put to the House, not one has met with unanimous approval.

Bernard Durkan (Kildare North, Fine Gael)
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Nor should it.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That is a matter for the Opposition parties to determine and decide upon in their own democratic way.

Furthermore, in respect of meeting the continuing challenge that faces the country in establishing and maintaining stability in our financial system and the real economic challenge that faces the country in the months and years ahead, it is important to continue to try to do this in a way that brings a national effort behind any proposals that are brought forward.

As I stated, a framework has been agreed with the social partners. There is much, for example, in what the Irish Congress of Trade Unions has had to say, which is consistent with my approach and that of the Government. It is an agenda which closely reflects the framework agreed between the social partners on 28 January and the Government's views that an integrated national response to the current crisis is not only desirable but essential if there is to be sufficient impetus and a coherence of approach to meet the scale of the challenge. I remain of that view.

At present, however, there is not a basis for the resumption of formal negotiations. Obviously, the week in which we enact the legislation providing for the imposition of a pension levy is not the most conducive week for such discussions. However, I believe everyone who is interested in the betterment of the country and meeting the challenge we face must try to ascertain if there is a way to return to these issues in a comprehensive fashion, although not specifically on the policy initiatives we have taken, which are necessary in the circumstances in which we find ourselves. I remain open to discuss with the social partners the real challenges facing us in the months and years ahead. In the meantime, the Government, as it has demonstrated, will continue to take whatever decisions we believe are necessary in the circumstances. We look forward to those efforts.

Eamon Gilmore (Dún Laoghaire, Labour)
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The reaction of most people today to the news that the Garda has gone in to search the offices of Anglo Irish Bank is that it is about time. I do not want to say any more on the issue for the reasons that have been stated.

The priority we all have to address, one on which we all agree, is the necessity and imperative of restoring confidence in the Irish banking and financial system. We must also be honest, however, about what is eroding the confidence in Irish banks and the banking system. A contributing factor has been the incremental release of information, in particular about what went on in Anglo Irish Bank. We also have deficiencies in the regulatory set-up and the political supervision of this set-up by Government. We know about the back-to-back arrangement between Anglo Irish Bank and Irish Life & Permanent, on which PricewaterhouseCoopers reported in October. The Minister for Finance did not read the report at the time and did not find out about it until January when the matter was drawn to his attention. When he found out about the arrangement he did nothing until 10 October when it became public knowledge, at which point we had a flurry of activity with the board being called in, executives resigning and so on.

At the weekend, a most extraordinary report, one I find hard to believe, was published in The Sunday Tribune. The newspaper has indicated it has seen transcripts to confirm its report that the financial director of Anglo Irish Bank, Mr. Willie McAteer, told the head of our Financial Regulatory body, Mr. Neary, at a meeting in September that the bank would be "managing" its balance sheet, in other words, cooking its books. According to The Sunday Tribune, Mr. Neary responded with the words, "Fair play to you, Willie."

The Sunday Tribune report also states that staff in the Office of the Financial Regulator were informed in a telephone call from officials of Anglo Irish Bank in October, made after the guarantee was put in place, that the bank was manipulating its balance sheet and the balance sheet did not represent a real number. The newspaper also reports that a senior civil servant, who is described as working closely with the Minister for Finance, Deputy Brian Lenihan, assured Irish Life & Permanent that he understood why it was necessary to carry out the back-to-back transactions and that there was no need for concern over these arrangements. Has the Taoiseach checked if these stories are true? Has he asked the Minister for Finance about them? What can he tell the House about them?

I agree with the Taoiseach that we have to restore confidence in Irish banks. Part of the process of restoring confidence in Irish banks, particularly Anglo Irish Bank, is to identify if wrongdoing took place and, if so, to have it dealt with. Another part of the process is to restore some confidence in the regulation of Irish banks. I would like to know if the story which appeared on Sunday is accurate and what steps the Taoiseach or Minister for Finance have taken to check if it is true.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I will make a general point and then answer the specific questions raised. As everyone knows, a thorough investigation is taking place in Anglo Irish Bank and certain matters which have come to the attention of the authorities are being investigated. People will be aware, therefore, that the meeting referred to in The Sunday Tribune article did not take place until 22 January 2009, that is, after the Government's decision on the nationalisation of Anglo Irish Bank. It seems from the newspaper accounts that this is an allegation based on a newspaper's interpretation of a document that is at least a third hand account of impressions of persons who were supposed to have attended the meeting in question.

The Department of Finance has no role in approving transactions of this kind between banks, much less four months after the fact. When the Department became aware in October, as a result of the initial PwC report on Anglo Irish Bank, that such transactions did exist the matter was immediately drawn to the attention of the Financial Regulator. The simple point I am making is that there are interested persons seeking retrospective approval on matters which were not given the imprimatur by the Department of Finance in any shape or form. I am satisfied of that, knowing the official concerned. Therefore, any effort to deal with this matter other than through the proper investigative channels — based on surmise, interpretation, recollection, or the post-dated memo of 22 January which mentioned something that was alleged to have happened in September — will not be useful. I did not attend the meeting in question; nor do I know of anybody who attended.

Let the investigators deal with the matter, because that is the only way we will get to the truth. It is important that any information that becomes available in the public domain be seen in that context. The only way in which this House can proceed — indeed, the only way in which the law can be pursued — is through the investigative arrangements set down by Acts of the Oireachtas. Every aspect of this matter will be investigated by the people concerned, independently and statutorily, and the true facts will be brought out. I cannot add to that.

Eamon Gilmore (Dún Laoghaire, Labour)
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I will try to be helpful. These questions are in the national interest. As I do not want to be adversarial about this, I invite the Taoiseach, with due respect to the answer he has given, to try to answer my questions a second time. The issue in respect of the senior civil servant at the Department of Finance is not whether or not the Department of Finance gave approval to the arrangements between Anglo Irish Bank and Irish Life & Permanent. It is accepted that it did not approve or give, as the Taoiseach said, an imprimatur to it. The question is whether it gave the nod to it. That is what I want the Taoiseach to address. That is important.

John Cregan (Limerick West, Fianna Fail)
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It is a conspiracy theory.

Eamon Gilmore (Dún Laoghaire, Labour)
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We have a duty to ask questions here. I will try to ask the questions——

He did an investigation.

Eamon Gilmore (Dún Laoghaire, Labour)
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——in as responsible and coherent a way as I can. These are questions I did not invent.

Dermot Ahern (Louth, Fianna Fail)
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Like last week.

Eamon Gilmore (Dún Laoghaire, Labour)
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They have been raised in reports that are in the public domain. There is a responsibility on the Taoiseach or the Minister for Finance to address them when they are asked, and I am inviting them to do so.

My other question is about the Financial Regulator. We know Mr. Neary is gone. However, has the Taoiseach made any inquiries about the regulator being told in September — and, apparently, his office being told again in October — that Anglo Irish Bank was, in effect, managing its balance sheet, and that it was given the nod for that? This is a case not of light regulation but of blind-eye regulation. The reputation of the country and of our banks, and all the economic consequences that flow from that, are at stake.

What went on in Anglo Irish Bank must be investigated. The Labour Party has been seeking this for some time and I am glad to see progress being made on it. We have been seeking to have an inspector appointed, for example. However, there is also the issue of the reputation of our regulatory regime and the political supervision of that regime. These reports were in a Sunday newspaper. I do not believe everything I read in the newspapers, but I do think——

Peter Power (Limerick East, Fianna Fail)
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Even the polls?

Dermot Ahern (Louth, Fianna Fail)
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The bits they put in themselves.

Paul Connaughton Snr (Galway East, Fine Gael)
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There is nervous laughter over there.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach should respond in the interest of making sure the country's reputation is not further damaged.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I take the point that has been made. These transactions, as I said, took place at the end of September last year. The meeting referred to in the article in The Sunday Tribune did not take place until 22 January 2009. I am simply making the point that the Department of Finance official concerned had not been briefed on any discussion that may have taken place with the Financial Regulator on the matter and was not in a position to comment on that discussion, and the official concerned gave no imprimatur whatsoever to those transactions.

The position of the Financial Regulator is that it did not give authority to a transaction that would constitute a wrongdoing or would not be in compliance with the Central Bank Acts or the companies legislation. Regardless of what motivation there might be for putting across such a view — it should be kept in mind that this was four months after the fact in a memo dated after the decision on nationalisation of the bank — in respect of people looking back to see whether they could find retrospective approval for any such thing, the investigator is the only person who can come to a conclusion on the matter. The authorities would not agree with the interpretation being put on the reference to the memo dated 22 January, which is an important date when one takes into account that we are now looking back in the aftermath of a due diligence process that had taken place prior to that date and the decision taken by Government to nationalise the bank in the interest of maintaining financial stability in the country and of making sure that a bank of systemic importance did not fail. I am putting it no further than that.

I am as constrained in the matter as Deputy Gilmore but I am simply making those points as they are the reason we should be cautious in accepting the veracity of any such interpretations, given the interests of various parties, if I am making myself clear. Furthermore, I regard the official concerned, whom I know and with whom I have worked in the past, as a person of the highest integrity. I have no reason to believe that the Office of the Financial Regulator was not also seeking to discharge its duties conscientiously.

Leo Varadkar (Dublin West, Fine Gael)
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Did the Taoiseach ask whether it was true?