‘Irish taxpayers could have been spared €14bn’

Irish taxpayers could have been spared more than €14bn worth of payments to unsecured bondholders without jeopardising their deposits despite repeated claims to the contrary, the previous government’s chief legal adviser has claimed.

Former attorney general Paul Gallagher is the first senior government official to break ranks with colleagues in the former Fianna Fáil- led administration which repeatedly stressed that it would be legally impossible to enforce losses on the speculative unsecured bondholders.

In evidence to the banking inquiry, he said that he had written to the late finance minister Brian Lenihan advising him of the possibility of legally accommodating burning the bondholders while protecting deposits.