Do the emergency powers given to the minister go too far?

Emergency powers granted to liquidate Anglo’s bad debt could be dangerous, claim TDs, but have been defended as necessary to protect the use of public funds.

Finance Minister Michael Noonan even went as far as to tell the Seanad during an all-night debate on Anglo — now known as the Irish Bank Resolution Corporation (IBRC) — that he had to act to block “avenues of attack” on the Irish taxpayer.

We may never know what these supposed “scares” were or where they were coming from. There were worries about “substantial leaks” to the media impacting on the assets of IBRC. There were others possibly waiting to get to the courts in Ireland, London and the US to get their hands on those assets, the minister told senators.

It is hard to imagine business people banging down the doors of the zombie bank or dragging their lawyers to court to get their hands on Anglo’s toxic debt. But the genuine fear is that it was necessary for the liquidation to be implemented immediately otherwise creditors could strip the bank of its assets, and debtors might refuse to pay, thereby threatening at least €12bn in IBRC assets owned by the State.

This resulted in the chaotic scenes and the night of drama around Leinster House this week as the Coalition rushed through the emergency Anglo liquidation legislation.

But do powers granted solely to the minister go too far? Under the terms of the 58-page bill, the finance minister can issue direct instructions to the liquidators and others on what to do with the assets.

Section 7 of the bill allows the minister to not only appoint the special liquidator to wind up IBRC but also to remove that person and appoint another at any time.

Furthermore, the minister is the one who issues instructions to the liquidator on how to wind up the bust bank, says section 9. Nama ultimately becomes the body overseeing the handling of Anglo’s debt. Section 13 of the act allows the finance minister to direct Nama to acquire assets. It adds: “The terms and conditions of every such acquisition, including the price, shall be specified.”

But it is section 17 of the bill which caused the most uproar this week. This allows the minister to create and issue securities, such as bonds, at “such rate as the minister thinks fit”.

Essentially, this has allowed the minister — and, of course, the current Government — to determine in its private talks with the European banking leaders what type and rate of bonds can be swapped for the Anglo promissory notes. Such behind-the-scene deals are questionable, argue the opposition.

The same section adds that “the minister may issue funds from the Exchequer to enable him to engage in such transactions of a normal banking nature as he considers appropriate”.

Independent TD Stephen Donnelly told the Dáil late on Wednesday night about his concerns about powers in determining bond rates.

“The bill also gives the minister power, with no Dáil oversight and no Dáil vote, to issue securities.

“That means the minister will be able to sit down with Governor Honohan and the president of the European Central Bank, Mario Draghi, and say, ‘Let us all agree to turn this €28bn promissory note into a 40-year bond’, and we in this House will have no say.”

This is exactly what happened.

Mr Donnelly continued: “We will have no vote because we will be giving the minister that authority in this bill. Appropriation of public money is the gift of this House alone, not of the minister or the Cabinet. It is entirely possible that section 17 could be ruled unconstitutional.”

His colleague, TD Shane Ross, added: “There certainly will be lawyers all over this bill.”

Section 17 also allows Mr Noonan to decide the costs associated with Anglo’s liquidation, which we now know will be between €30m and €35m.