Kieran O'Donnell (Limerick East, Fine Gael)
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Question 3: To ask the Minister for Finance when his attention was first drawn to the bonus payments being made to bank executives after the taxpayer guarantee was put in place; the steps he is taking to recover these bonuses; and his views on whether further changes at board and executive level are needed to restore confidence in the banking system here. [12766/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I received the report of the covered institutions remuneration oversight committee, CIROC, on 3 March. It was common knowledge that remuneration levels for senior bankers based on salary, bonus, pension and other payments were high long before the Government guarantee. Some of the relevant material was in the public domain. The CIROC was established as part of the guarantee scheme for the covered institutions and its report has provided additional specific details in regard to remuneration levels in the banks. The committee reported that with the exception of the Irish Nationwide Building Society, where the chief executive officer was paid a prearranged incentive bonus of €1 million for 2008, no bonuses have been or will be paid to chief executive officers and senior executive management teams in respect of their performances in 2008-2009.

Recent detailed disclosures in regard to the remuneration of the chief executive officer of the Irish Nationwide Building Society require investigation. I wrote to the acting chairman of the board on 12 March stating that I considered the payment of the bonus to be potentially a breach of the guarantee scheme and seeking an immediate reply as to what the board intended to do. While the reply to that letter indicated that the payment concerned was contractually committed before the Government guarantee, I have asked that the two directors appointed by the board nominated by me should review all these issues and that I should receive a report within one month. I have also requested the board to brief me next week on its plans for the society, including the review of management and board personnel.

Under the provisions of the guarantee scheme, two non-executive directors nominated by me were appointed to each of the covered institutions. In nationalising Anglo Irish Bank, I have ensured an overhaul of the board. Also, under the terms agreed on the recapitalisation of Allied Irish Bank and Bank of Ireland I can appoint up to 25% of the board members subject to the finalisation of the recapitalisation proposals announced in February. As the Deputy will be aware, there have been changes of chairperson and CEO in Anglo Irish Bank, Bank of Ireland, Irish Life & Permanent and EBS.

Kieran O'Donnell (Limerick East, Fine Gael)
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Was this bonus paid prior to the appointment of the Government-appointed directors? Was the payment of the bonus brought forward to a date earlier than when the person in question was entitled to receive it? The year end for Irish Nationwide building society is 31 December and Mr. Fingleton would appear to have been paid the bonus well prior to that date.

It is unusual, as I see no great difference between this case and that of the CEO of Irish Life & Permanent, whose removal was far more forceful as the Minister indicated his expectation that the board would live up to its responsibilities. When it did not, the Minister asked the members to meet him and made certain that Mr. Denis Casey stood down. Why is the Minister not taking the same line with Mr. Fingleton? A Government guarantee scheme has been put in place but if it had not been, would Irish Nationwide have been able to pay the bonus?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy asked a number of interesting questions. With regard to the position of the two directors appointed to the board of the society at my request, neither held the office of director at the time of the payment of the guarantee or execution of whatever arrangement was arrived at to promise the bonus.

Kieran O'Donnell (Limerick East, Fine Gael)
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When will the bonus be paid?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I do not have the date to hand in my brief today. On receipt of detailed information I will be in a position to advise the Deputy. He will appreciate I do not have the information at this stage. The two directors were not members of the board at the time when any payment was made, so they are entirely strangers to this transaction.

In regard to the position of Mr. Casey and Irish Life & Permanent, I went to great lengths during those board meetings to make clear that I would not be drawn out on whether I had indicated to any directors or the board my attitude regarding his status. It is correct for the Deputy to draw the comparison but I behaved in exactly the same way on this occasion. It is not appropriate for a Minister for Finance, in his communications with a board or directors while meetings of the board are pending, to express a view about what a board should do.

I made it clear on television at the time that it was quite impossible to do so given the possible legal exposures for the State. I am sure Deputy O'Donnell would appreciate that as a deputy Opposition spokesperson on Finance. A Minister for Finance who has guaranteed institutions should not put himself into a position where he exposes the State to any liability by injudicious comments about what should or should not be done by the boards, which have the responsibility of performing their duties in the management of these societies and banks.

Kieran O'Donnell (Limerick East, Fine Gael)
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If the Minister sees no great difference in the cases, will he now tell the board members of Irish Nationwide Building Society that he expects them to live up to their responsibilities? Will he pursue every legal avenue to ensure this €1 million bonus is repaid to Irish Nationwide by Mr. Fingleton? Will he, if necessary, introduce retrospective legislation or a form of legislation like that being brought in by President Obama relating to AIG?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have made it clear in my reply that all options will be considered. In the first instance it is a matter for the society and its board to investigate these transactions and see what options are available to the society. In default of any action by the society I will, on legal advice, see what options are available to me.