Willie O'Dea (Limerick City, Fianna Fail)
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To ask the Minister for Finance the procedures that have been put in place to prevent a recurrence of the overcharging of the National Pension Reserve Fund in respect of a portfolio liquidation as highlighted by the recent report of the Comptroller and Auditor General. [42318/12]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the National Treasury Management Agency (NTMA), as Manager of the National Pensions Reserve Fund (NPRF), that the recommendations of the Comptroller and Auditor General on the issues that have arisen in respect of the portfolio liquidation of the National Pensions Reserve Fund are set out in section 4.60 of the Report of the Comptroller and Auditor General for 2011. The NTMA and the NPRF Commission accept those recommendations. The NTMA is in addition proposing to take a number of other steps to mitigate risks specifically associated with activities such as those encountered in the case of overcharging in question, as set out in paragraph 4.48 of the Report. In relation to the specific cases of overcharging, it should be noted that:

- The NTMA suspended State Street Bank Europe Ltd (SSBE) from its panel of transition managers when questions arose about the application of commissions by SSBE after NTMA queried the departure of two senior executives;

- SSBE is authorized and regulated by the UK Financial Services Authority and the NTMA has informed the Authority about the charging issues with SSBE at the request of the NPRF Commission;

- the overcharging involved the application of unauthorised commissions to NPRF trades in a manner that was never visible to the NPRF or its global custodian and had the effect of reducing the sale proceeds obtained by the NPRF by 0.07%, and

- it would appear that the unauthorised commissions were not identified either by SSBE’s internal controls and procedures or by its internal audit or compliance functions.

The measures identified by the NTMA relate to, where possible, assessing settlement arrangements for trades, engaging the NPRF’s internal auditor where it is cost-effective to audit the books of the transition manager relating to the NPRF transactions and seeking to promote the development of improved market standards and practices.

The recommendations of the Comptroller and Auditor General include a recommendation that the NTMA should consider referring trade data for review by a third-party firm, reviewing if penalty terms should be included in contracts and reporting matters of this nature to the relevant regulatory authorities even though there may be no legal obligation to make such a report.