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Noonan has questions to answer on sale of BoI capital notes – Pearse Doherty

17 January, 2013 - by Pearse Doherty TD

Sinn Fein Finance Spokesperson Pearse Doherty TD said today that Minister Michael Noonan has questions to answer surrounding the sale of €1 billion worth of the Contingent Capital Notes (CCNs) in the Bank of Ireland last week. Doherty said the government was spinning this sale in a positive light but that a number of issues concerning the management of the sale and the movement of personnel in the Department of Finance have arisen.

Deputy Doherty said:

“The sale of €1 billion worth of CCNs in the Bank of Ireland has been spun by the government as a success story because it is being heralded as a sign of the state’s exit from the banking sector and back to a process of normalised banking activity. Normal in Irish banking terms however, is not always a positive term.

“A number of questions have arisen about the management of the sale of these CCNs. While their sale means the capital sum of €1 billion can be written off the state’s overall debt, the net effect of this sale is a loss of €18 million to the exchequer this year and €64 million next year.

“When questioned about this in the Dáil today, Minister Noonan dismissed the €18 million loss this year, suggesting it would be found somewhere else. This highlights the completely contrary view taken by this government to losses incurred by the banks verses the amounts it cuts from ordinary people at budget time. The campaign around the restoration of the respite grant in 2013, which was a cut of €26 million, was steadfastly opposed by this government which claimed that the €26 million could not be found anywhere else.

“Secondly, the sale of these notes was driven by the Shareholder Management Unit in the Department of Finance, the head of which, moved to work as Chief Executive in Bank of Ireland’s Corporate and Treasury Division yesterday. Minister Noonan stated today that the senior civil servant in question has been on holidays since Christmas and would not take up his post in the bank for two months.

“In welcoming the move, Minister Noonan said that it was government policy to encourage greater mobility between the public and private sector. However the Programme for government committed to introducing a cooling off period of two years for senior civil and public servants before they could move into any private area of employment that had the potential for conflict of interest.

“The secrecy with which the sale of these notes was conducted makes it very difficult to establish if it was the right move for the taxpayer at the right time. What is clear is that the lack of transparency around the planning of the sale and the movement of senior personnel in the Department of Finance throws open questions.

“It was failure to ask these kinds of questions in the past that contributed to the crisis we are now in and there has to be a safe space to raise the issues and get answers on them now.

“However, even today in the Dail, these questions were responded to defensively and met with strong opposition by government. This harks back to the practices of Fianna Fáil and I’m sure will instil great cause for concern in the Irish people.”

Editor's note:

The Programme for Government commits the following:

“We will amend the rules to ensure that no senior public servant (including political appointees) or Minister can work in the private sector in any area involving potential conflict of interest with their former area of public employment, until at least two years have elapsed after they have left the public service.”

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