Department ignored calls to clarify €3.6bn error

EVIDENCE suggests the Department of Finance ignored repeated requests over the past 15 months from the National Treasury Management Agency to clarify how a €3.6 billion loan should be treated in the national accounts.

Officials from the department admitted yesterday no records had been found, to date, to show that they had responded before last week.

It follows on from the revelation that an ‘accountancy error’ on the treatment of borrowings of €3.6bn by the Housing Finance Agency had resulted in government debt being overstated by €3.6bn or 2.3% of GDP.

The Dáil Public Accounts Committee was yesterday given records of emails which showed an NTMA official had first raised the issue with the department on August 23 last year. Two further emails from NTMA were forwarded to the department before September 4, 2010, while the issue was queried again last June.

NTMA director Oliver Whelan said it was assumed, within the agency, that the department had acted on the concerns raised.

Questioned by TDs, the secretary general of the Department of Finance Kevin Cardiff said he only became aware of the error last Friday — although his officials had acknowledged the double counting error on October 24.

He observed the problem seems to relate to a judgment by an official on how the agency loan should be treated.

In an opening statement, Mr Cardiff said he regarded the issue as a serious matter and had ordered an internal investigation as well as an external review of systems used within the Department of Finance.

He hoped the internal inquiry would be completed before the end of the month.

The error arose, he explained, because of a change in 2010 which saw the Housing Finance Agency borrow directly from NTMA where previously the NTMA had acted as an agent in arranging loans for it.

He admitted some element of double counting had been going on since mid-2010 despite the issue being “signalled at a technical level” by the NTMA since last year.

PAC chairman, John McGuinness criticised Finance Minister, Michael Noonan for remarks he made in the Dáil on Wednesday which suggested that the committee and the Comptroller & Auditor General should have detected the mistake.