Catherine Murphy (Kildare North, Social Democrats)
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186. To ask the Minister for Finance if his attention has been drawn to aspects of the Commission of Investigation into companies (details supplied) in the context that it is concern expressed regarding the definition of capital loss as used by the Special Liquidator; his views on whether the definition is inconsistent with the concept of prudence, a requirement of European Union company law and that it gives the Special Liquidator an opportunity to withhold from the Commission certain preferential loans to connected parties that are loss making for the taxpayer; and if he has received a copy of a letter dated 23 October 2015 that the Special Liquidator wrote to the Commission on this matter. [45215/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised that the Deputy has clarified that the report referred to in this parliamentary question is the Commission of Investigation’s First Interim Reportof November 2015, and not the Final Report of the Commission of Investigation published by An Taoiseach on 7 September 2022. While this matter was raised by the Commission of Investigation in its First Interim report, as set out below, I am confident the Commission resolved the concerns to its satisfaction in the interim as this matter is not raised in the Commission’s Final Report.

This First Interim Report (Section 15) identified a concern of the Commission in November 2015 that the definition of “capital loss” adopted by the Special Liquidators may not respond fully to the objectives of the Commission, and noted that the Commission intended to arrive at a concluded view as to the meaning of capital loss.

I understand that the definition of capital loss for the purposes of the Terms of Reference is primarily relevant to identifying which transactions fall to be investigated by the Commission, whether the initially identified 38 transactions, or a greater number which might result from a wider definition of capital loss. It remains to be determined whether other transactions will ultimately be investigated by the Commission of Investigation.

I understand from the Commission’s First Interim Report that the definition of capital loss adopted by the Special Liquidators and provided to the Commission did not include loans in respect of which the underlying security had been sold and the remaining balance had been deemed irrecoverable, unless that balance was written off in the books of the Bank in the Relevant Period, being 21 January 2009 (the date of the nationalisation of IBRC) and 7 February 2013. In its Second Interim Report (Section 2.17 et seq), the Commission confirmed that it had further engaged with the Special Liquidators and also obtained expert advice on the meaning of capital loss as understood in the banking industry. The Commission noted that it would welcome clarification of the intended meaning of the term “capital loss”.

I am advised that this issue was not raised in the Commission’s next ten interim reports, nor in its Final Report, which is some 1376 pages long, plus appendices of a further 165 pages. In the circumstances, it seems reasonable to conclude that the Commission, having considered the matter and taken advice, was satisfied with the definition of “capital loss”.

I note that Judge Brian Cregan, a judge of the High Court, has spent seven years investigating the matters set out in the Terms of Reference approved by the Oireachtas. I am satisfied that the Commission undertook its work diligently and investigated all relevant matters, including taking expert advice where required, and that the SLs assisted the Commission fully and comprehensively. I have no reason to believe that the Special Liquidators in any way withheld information from the Commission. I am satisfied that the definition of capital loss adopted by the Commission was appropriate and I can confirm that the then Minister for Finance did not receive a copy of a letter dated 23 October 2015 from the SLs to the Commission on the matter.