Feargal Quinn (Independent)

I welcome the Minister of State, Deputy Noel Ahern, to this House once again. The debate has been quite interesting. As Senator Boyle stated, it is a reminder of the need to consolidate legislation which is something the Minister of State should take into account.

I want to raise a matter which is certainly not part of the central function of this Bill but which is not dealt with at all, namely, the risk that exists to the good name of Ireland as a place to carry out financial services. From the very initiation of the Irish Financial Services Centre 20 years ago, it has been a cardinal principle of Government rhetoric that the financial services regime we were creating would be properly regulated by international standards. Repeatedly, we often stressed that we were creating not a tax haven but a genuine financial centre that would provide real services. From the beginning it was realised that achieving respectability for our financial services centre was essential to its long-term success and goals. However, at the same time, the Government was busy assuring potential participants in the centre that any regulation introduced would not be bureaucratic and would be with a light hand.

There was a certain tension between these two messages it was sending out to two different parts of the financial community. Many sceptics thought the end result would be that the Irish centre would have regulation that just went through the motions but at the end of the day would not prevent participants in the centre doing anything they wanted. I refer to the questions that were asked 20 years ago.

Twenty years on, it is clear that, whether these sceptics were right, there now exists in financial circles what it would not be an exaggeration to call a crisis of confidence in the quality of regulation at the IFSC. As respectable an organ as The New York Times characterised Ireland as "the wild west of financial services". Coming from such a respected source, this was a disastrous judgment and it followed on directly from certain highly questionable activities in the re-insurance area to which we refer today. Such activities would be plainly illegal in the United States.

Since then, our reputation has come under further attack from Australia, with the regulators there clearly very unhappy about certain activities being carried on from Dublin that have had implications for their own marketplace in Australia. Against this background, all we get by way of action from the Minister for Finance is soothing assurances that the Government attaches the highest importance to effective regulation, which is the type of statement that was made 20 years ago. However, in the absence of any firm action being taken, I fear these assurances have about as much credibility as the repeated protestations by the United States Secretary of the Treasury that his Government favours a strong dollar.

Meanwhile, other recent events have made the situation more acute and have put our international reputation even more at risk. One of the issues at which outsiders look most closely when they consider a foreign financial services centre is the probity of the local people who operate in that centre. The smaller the country concerned and the more closely-knit the people involved, the greater is the need to demonstrate that the principles of fair trading will be scrupulously observed.

What people watch out for most closely is any evidence that the playing field between foreigners and locals is not fully level. In particular, they are alert to the possibility of insider trading which becomes a more likely possibility the smaller the marketplace is. Foreign operators will run a long way from any centre where they believe insider trading is prevalent because they know that such a market can be easily stacked against them. No amount of tax advantages can compensate for this risk.

It follows, therefore, that of all the elements of our international reputation, the one we should be most careful to preserve jealously is in regard to insider trading. Our claims, and our behaviour in support of these claims, should be absolutely above question. If this is not the case, the whole edifice of our international reputation is at risk of falling down like a house of cards.

In this context, the two events that took place during the summer are of the highest importance to the future of Ireland in the world of financial services. I do not have to remind Members about them. One was a decision of the Supreme Court in a civil case which made it clear beyond any doubt that a serious case of insider trading had taken place. That was bad enough but what happened next was even more significant. That judgment should have been followed by universal condemnation of the action by all the important players in the marketplace, allied to swift Government action to ensure the matter would be promptly and thoroughly pursued in the criminal courts. In fact, what happened was the exact reverse. The important players in the marketplace — incredible as it might appear to any outsider — queued up to express their full confidence in the person concerned and argued against any punitive action being taken against him. Meanwhile, the civil authorities who have the power of prosecution in the matter, met the situation with a deafening silence.

I have no wish whatever to conduct a witch hunt against this individual but if the Irish financial establishment is prepared to not only turn a blind eye to misbehaviour that has been identified by the highest court in the land and also to argue publicly that sleeping dogs should be left to lie, then the Irish financial establishment has dealt a massive blow to the international reputation on which its own future well-being crucially depends.

All this sends precisely the wrong message to the world outside and creates an urgent imperative that we should do what we can to undo the damage already caused and which will continue to worsen for as long as effective action is not taken. It may be said this matter is not germane to the Bill, but it is. The purpose of the Bill is to ensure everything we do in regard to financial services upholds rather than damages the success that has taken place.