Ruairi Quinn (Dublin South East, Labour)
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Question 95: To ask the Minister for Finance if he has sought, or will be seeking, an 8% reduction in professional and consultancy fees for 2009 or 2010 from those private sector enterprises advising him, the National Treasury Management Agency and the Financial Regulator on NAMA, the bank guarantee and restructuring of the Irish banking sector; and if he will make a statement on the matter. [37686/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy is aware, in February of this year, the Government decided to pursue a general 8% reduction on fees to legal, medical, veterinary and other professionals engaged by the public service from 1 March 2009. My Department wrote to each Department outlining how this decision should be implemented.

I have informed this House previously that I have received advice in regard to the banking crisis from various sources, including the Attorney General's office, the Central Bank, the Financial Regulator and the NTMA. I have also received advice from Arthur Cox solicitors. The 8% reduction has been applied to fees paid to that company since March 2009.

The National Treasury Management Agency has engaged HSBC, Arthur Cox and PricewaterhouseCoopers to provide advice in regard to the National Asset Management Agency. In July 2009, the NTMA issued a tender to procure general banking advisers in regard to the whole financial system through the procurement website www.etenders.gov.ie and Rothschilds were awarded this mandate to 30 June 2010. I have been advised by the NTMA that all firms priced the work at a substantial discount - indeed, multiples of 8% - to win the business. I also understand from the NTMA that the agency-related tenders will use the public procurement website and any prices sought will be subject to the 8% reduction.

The Financial Regulator has advised me that it is operating in accordance with public sector requirements under the Financial Emergency Measures in the Public Interest Act 2009 when awarding any contract for the provision of professional and consultancy services to it. It is important that all sectors play a role tackling the serious problem of the deterioration in the public finances. The 8% reduction in professional, consultancy and other professional services are part of the overall savings package which the Government has announced.

Joan Burton (Dublin West, Labour)
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I thank the Minister for his reply. We know the Department of Finance and its associated agencies, such as the NTMA and the Financial Regulator, have committed approximately €23 million over the period of the banking crisis. We know, as the Minister has just said, that this has so far involved fees to Arthur Cox of €1.6 million in 2008 and a further €8.4 million covering 2009 and 2010; PricewaterhouseCoopers seems to have got at least €3.8 million; Jones Lange LaSalle seem to have got at least €1 million which we know of so far; and Merrill Lynch got €7.3 million. This all adds up to approximately €23 million to date. The Minister also referred to further consultants, HSBC and Rothschilds, who got the Merrill Lynch contract. In addition, the Minister announced in the NAMA draft business plan that he intends to spend €240 million a year on consultancy, some of which would go into the banks and much of which would go into the private firms in regard to legal affairs, accountancy, auctioneering, valuation and so on.

Does the Minster understand that this amount of fees is staggering? I would like to know how the 8% is calculated. I have not seen any evidence that the Merrill Lynch fee income to the Department has actually been reduced by 8% or, indeed, that the accountants and the various other banks have actually reduced their fees by a real 8%. Is there a tender document which the 8% is knocked off? We have not seen any actual evidence.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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To take the contentions made by the Deputy in turn, first, an estimated figure of €23 million to date was cited by her. Of course, the bulk of that sum was discharged by the banks themselves as part of the recapitalisation arrangement - the banks were obliged under the recapitalisation arrangements to defer these expenses. In view of the crisis that emerged in September 2008, Merrill Lynch was engaged on the recommendation of the NTMA and, at my direction, without a tendering process. For that reason, a subsequent tendering process took place and Rothschild secured that particular tender. 4 o'clock

The figures mentioned in the business plan are indicative figures. We will have a further opportunity to discuss them on the establishment of the NAMA board. Clearly, those figures include a substantial amount required to be paid under EU rules, where the loans are left under the management of a particular financial institution.

The question of the 8% is something that is implemented in the context of each particular contract. I will write to the Deputy with further clarification on it, because I do not have information to hand about whether the 8% is factored into the tendering procedure.

Arthur Morgan (Louth, Sinn Fein)
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What is the Minister's view of the current in-house experts available to him and their competency on a range of matters for which he feels he needs to employ consultants? When will the Minister recruit in-house experts on these matters to eliminate the need for many of these consultants?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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With the sanction of the Government, the Department is recruiting an in-house banking analyst to analyse bank matters. That person will be appointed as a civil servant within the Department, although it was not possible to appoint such a person by way of transfer from an existing Department. I was advised at the outset of the banking crisis that the Department required such advice, and that the advice was required in any event for the protection of both the Minister and the Department.

Joan Burton (Dublin West, Labour)
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Can the Minister provide the Dáil with information on the hourly rate charged under these tender prices? Would the rate be in excess of €1,000 per day for the senior people working on the contracts? I find the €7.5 million fee charged by Merrill Lynch extraordinarily high. In his report on NAMA, Mr. Bacon referred to Merrill Lynch, but it is very difficult to know what bit of the company's advice was useful. The Department or the NTMA recently hired an economist to give the Minister advice on banking trends. The Minister claimed he had engaged an expert-----

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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That is the civil servant to whom I referred in my reply to Deputy Morgan.

Joan Burton (Dublin West, Labour)
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What is the cost of employing that person per annum?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I do not have that information to hand. Merrill Lynch staff were constantly on call and available up to and during the guarantee period, during subsequent discussions with the financial institutions, in connection with the decisions surrounding the nationalisation of Anglo Irish Bank, and in decisions surrounding the capitalisation of Bank of Ireland and AIB. As Merrill Lynch had been retained otherwise than by way of tender due to the urgent circumstances of the time, the NTMA took the view that it was desirable to re-tender for the business. Perhaps because of changes in world economic conditions, Rothschild tendered at a very reasonable rate for the services.

Joan Burton (Dublin West, Labour)
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Can the Minister provide information on the hourly rate charged?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I will arrange for the information to be provided to the Deputy.