Fianna Fáil has opted for a flood of bank inquiries, to distract attention from the fact that every single one of them is being carefully constructed to ignore the role played by Fianna Fáil Taoisigh and Ministers in Ireland’s banking collapse.

What Minister Brian Lenihan now proposes is no less than three separate inquiries: a sworn commission of investigation; a report from the Oireachtas Joint Committee on Finance; and an ‘external review’ of the Department of Finance.

However, under the Lenihan proposals, only the banks, their accountants and the Central Bank and Financial Regulator will face the rigours of a sworn inquiry into default or dereliction.

He insists that the action – or inaction – of central Government and its civil service advisers should be dealt with only by way of a 10-year performance review, dealing with systems, structures and processes.

This is a clear attempt to shield this Government from any investigation into its own accountability for blindly steering our economy and people into catastrophe, for the second time in a generation.

The most basic need for any inquiry, statutory or non-statutory, is that the outcome must be credible. This means that both the persons chosen to conduct the investigation and the terms of reference given to them must stand up to independent scrutiny and give rise to public acceptance that the report will be sound and reliable.

But an inquiry such as this one, that omits a principal participant completely from its remit, will lack all credibility.

It is unacceptable that the Lenihan terms of reference should sate baldly – and I agree with him, so far as he goes – that there were serious failures on the part of the Central Bank and the Financial Regulator but should then seek to exclude any finding of similar failure on the part of the Government, the Minister or the Department.

I agree with Governor Honohan that the sworn inquiry should concentrate with finding out what went wrong in each financial institution.

That approach must also include an inquiry into what went wrong in the bodies that were meant to regulate those institutions.

And I and the Labour Party insist that that approach must also inquire into the actions of those responsible and politically accountable for the policy framework imposed on our regulators and for the smooth and effective running of our regulatory regime.

Otherwise, there will be no credibility of outcome.

I also believe there is a political consensus that the commission of investigation should have manageable terms of reference and should operate economically in terms of time and resources. It is absolutely critical that the scope of the investigation be designed so as to bring maximum added value and avoid the waste of taxpayers’ money.

In an effort to be helpful and to further that consensus, I am publishing what I believe are the minimum changes needed to the Government’s draft terms of reference for that commission, so as to enable the exercise to be credible.

These amendments would enable the Commission’s scope to be extended to cover the role of the Minister for Finance, the Government and the Department of Finance.

If the Minister wishes to reach the necessary consensus on how to proceed, he needs to stop playing with the committee and the opposition spokespersons and to sit down and hammer out an agreement.



Commission of Investigation into the Banking Crisis

Labour Party Amendments to Draft Terms of Reference


1. In respect of the credit institutions that are covered institutions (pursuant to the Credit Institutions (Financial Support) Scheme 2008 (S.I. No. 411 of 2008) the main causes of the serious failures, within each of those institutions, to implement and adhere to appropriate standards and controls (including checks and balances), in the context of corporate governance and prudent risk management policy and procedures.

(Note: delete “such as would have avoided the requirement for the provision of exceptional financial support from the State”. Even with appropriate controls, standards, checks and balances, it is likely there would have been a need for some ‘exceptional financial support’ for the banks from the State.)

3. The nature, extent and quality of the information sought by and provided to the external auditors of each of the covered institutions in relation to the failures referred to in paragraph 1 or the business models and strategies and business and lending practices referred to paragraph 2; whether the external auditors commented in their audit reports or other communications to the institutions on those matters; and whether there was any failure to conduct external audits to the appropriate legal, regulatory and professional standard.

(Note: this is an expanded version of the Government’s draft, so as to include the issue of compliance by accountants with appropriate legal, regulatory and professional standards.)

5. The nature, extent and quality of the information available to the Minister for Finance and his officers in relation to the matters referred to in paragraphs 1 to 4, and the use made of that information.

6. Whether there were failures, and if so their main causes, in the performance of the statutory roles and responsibilities of the Minister for Finance and his officers in relation to –

a. monitoring the performance of the Central Bank and Financial Services Authority of Ireland in respect of the regulation and supervision of the covered institutions and the maintenance of financial stability,

b. policy and legislation on the regulation of the financial services sector and the stability of the financial system,

c. the response to and management of the banking crisis, up to 15January 2009, and

d. overall budgetary policy, economic policy, economic forecasting and taxation policy,

to the extent that such failure contributed to conditions leading to the banking crisis and the crisis in the public finances of the State.

(Note: paragraphs 5 and 6 are new and are focussed on the actions and inactions of the Minister for and Department of Finance, both in the run up to and management of the banking crisis.