John Browne (Wexford, Fianna Fail)
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58. To ask the Minister for Finance if he has drawn up clear corporate governance guidelines in respect of the way the State should exercise its voting rights in State supported banks; and if he will make a statement on the matter. [23909/13]

Michael Noonan (Limerick City, Fine Gael)
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I can confirm for the Deputy that my Department takes very seriously its responsibilities in regard to safeguarding the State's assets and maximising the return to the taxpayers of the funds invested on their behalf. In this regard, a number of directions have been issued to the National Pensions Reserve Fund Commission, NPRFC, since the directed investments were acquired pursuant to my powers under Investment of the National Pensions Reserve Fund and Miscellaneous Provisions Act 2009.

The initial directions were issued in 2009 and these have now been superseded by directions given in 2010 and 2011. The 2011 directions require the NPRFC, on an ongoing basis, to notify the Minister for Finance in advance of all corporate actions, meetings or other exercise of voting or other rights the NPRFC has as a shareholder and exercise those rights in accordance with ministerial instructions; exercise its rights as a shareholder to require the bank to convene a general meeting if instructed to do so by the Minister for Finance; not dispose of the directed investments without instructions from the Minister of Finance; and take any action necessary to appoint or remove or maintain the directors as directed by the Minister for Finance from time to time.

The section of the NPRFC Act 2000 - consolidated to 1 October 2012 - that governs voting instructions is section 19B. This section requires the NPRFC to notify me in advance of any meetings or other exercise of voting rights as shareholder and they then vote or exercise those shareholder rights in accordance with my specific or general instructions. Analysis and advice is provided by my Department in regard to the votes cast by me and also in regard to actions taken by me as shareholder.

I reassure the Deputy that when I am entitled to vote or act as shareholder in respect of the State supported banks, I weigh up all the relevant facts and decide in the best interests of the taxpayers who have invested enormous sums in order to support these banks given their vital role in our economy.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his reply, a summary of which is that he personally decides on issues as they arise. We all know the issue which brought this into sharp focus was the recent Bank of Ireland annual general meeting. The Minister gave us his rationale for abstaining from the vote, namely, the ongoing Mercer report dialogue in the bank.

I felt it was important to get clarity on how decisions are made. This is particularly important with regard to Bank of Ireland, which is in a different category from AIB and Permanent TSB. In the future, the decisions that will have to be made on certain issues will require recourse to shareholders. I refer to the re-election of directors or - please God - the payment of dividends. It is important for us to understand the process the Minister undertakes when he arrives at the decisions he makes on behalf of the Government and, by extension, the Irish people for whom he holds these shares. Perhaps he can elaborate on that. When these individual decisions arise, from whom does he seek advice so that he can exercise his vote accordingly?

Pearse Doherty (Donegal South West, Sinn Fein)
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It is fair to say the general public was sickened when the Minister decided not to exercise his right to vote against the remuneration of the CEO of Bank of Ireland, Richie Boucher, who receives a salary of €843,000. He holds the citizens' votes in trust. He holds them on behalf of the citizens who bailed out the bank. I would like to join Deputy McGrath in asking the Minister to explain the decision. Did the Minister receive formal advice from within the Department or from the Central Bank? Did he receive any advice that was contrary to the direction he has taken? Will he make the advice public? If not, will it be available under freedom of information? It is very important for us to know what type of advice the Minister is getting on this issue and other issues. If he decides to sell the shares in one of our banks, for example, it could be a very negative issue for the State and its directed investment if the wrong price is achieved. Some banks have lost substantial sums of money because they sold at the wrong time. Will the Minister make the advice available? Did he receive any contrary advice on the remuneration issue?

Michael Noonan (Limerick City, Fine Gael)
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The salary paid to the CEO of Bank of Ireland was negotiated by the relevant Ministers in the previous Government, which was led by Fianna Fáil and the Green Party. While we would like the salary to be lower, we have been legally unable to dismantle it. This Government has provided for a much lower ceiling for remuneration for CEOs. I will not take any lectures from Deputy McGrath about extravagant salaries because his party provided for such salaries when it was in government.

Michael McGrath (Cork South Central, Fianna Fail)
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I gave no lectures. I asked valid questions.

Michael Noonan (Limerick City, Fine Gael)
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I would like to address the issue of the abstention at the AGM. As we have just 15% of the vote, our decision to abstain, vote against or vote for was not going to influence the outcome. All the other investors voted in favour of what was recommended. I gave my reasons previously. I think they are valid. I think the decision to abstain was a very good one. Arising from the recommendations of the Mercer report, I have written to Bank of Ireland and the other domestic banks to instruct them to respond by the end of the April outlining their strategies for the delivery of savings of between 6% and 10% of total remuneration costs. We have discussed this already. I did not consider it appropriate to endorse the directors' remuneration at Bank of Ireland in advance of receiving a response to my instruction. Therefore, I decided to abstain on this resolution. I can confirm that I voted in favour of each of the other resolutions. That is the position. It is a very valid position, contrary to what has been suggested in various contributions inside and outside the House. In his capacity as a journalist, Deputy Ross has written several articles criticising me. If my predecessor had followed the Deputy's advice in respect of Anglo Irish Bank, Seánie FitzPatrick would have been the CEO.

Finian McGrath (Dublin North Central, Independent)
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Come on. That is an old line now.

Michael Noonan (Limerick City, Fine Gael)
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That was the advice given by Deputy Ross in 2004.

Finian McGrath (Dublin North Central, Independent)
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He did not say that.

Shane Ross (Dublin South, Independent)
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I did not hear the Minister. What did he say?

Michael Noonan (Limerick City, Fine Gael)
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Deputy Ross heard it all right.

Michael McGrath (Cork South Central, Fianna Fail)
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I did not lecture anybody. I asked about the corporate governance guidelines that are in place to enable the Minister to make decisions on behalf of the citizens of this State when questions arise at the AGMs of the banks in which we hold shares. I accept that the final decision is made by the Minister. Who advises him? Is he advised by the NTMA or by the banking unit within the Department of Finance?

That is the issue that brought it into focus, which is fine, but more issues will arise in the future. The question is how the Minister arrives at those decisions.

Pearse Doherty (Donegal South West, Sinn Fein)
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I will be succinct in the hope of getting a reply. Did the Minister receive any contrary advice on the direction he took, which was to abstain in regard to Mr. Boucher's remuneration or salary? Did he receive any contrary advice, other than to abstain?

Michael Noonan (Limerick City, Fine Gael)
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As on all matters, this is a democracy and the Government, which has a majority in the House and is elected to govern the country, governs it. The Minister for Finance's mandate comes from the electorate and he takes advice from the appropriate authorities and makes decisions as best he can. That is the way it works. The NPRFC is the body that holds the shares and the officials from my Department are appropriate advisers, as are the NTMA and the Central Bank, depending on the issue. I take advice all the time and I then make up my mind and make a decision.

Pearse Doherty (Donegal South West, Sinn Fein)
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I take it he got contrary advice given the fact he will not give it out.