Just 60 officials carrying out banking crisis investigation

Just 60 officials across three State bodies are involved in investigating individuals who were central to the banking crisis, a report from the Oireachtas Public Accounts Committee finds.

Five years on from the bank guarantee, and the investigative process is “slow”.

PAC says a review of systems and procedures in place to probe corporate wrongdoing in the State is needed.

The hard-hitting report on bank stabilisation, a draft which has been obtained by the Irish Examiner, examines the work, or lack of work, by State bodies in addressing the crisis.

Between 50 and 60 officials across the Office of the Director of Corporate Enforcement, the gardaí and the Central Bank are involved in investigating individuals who were central to the banking crisis.

It points out that in Britain directors of failed banks have been banned or have faced heavy fines. It adds: “In that regard, the whole system of tackling white-collar crime has not operated well and there is no law on reckless trading as in other jurisdictions.”

The guarantee announced on Sept 30, 2008, covered €428bn of deposits and debt in six institutions, including around €12bn in dated subordinated debt. The circumstances that led to the guarantee, including the incorporeal meeting of the government in the early hours of that morning, the discussions with the European Central Bank and meetings between the government and the heads of the main banks, have yet to fully emerge. PAC says that after three years of public hearings that the full documentation of all these events has not been made available and key files from the Department of Finance were redacted.

At the time of the 2008 guarantee, there was a consensus that property prices would experience a soft landing and the “overall assessment of the public authorities was that the capital base [of the banks] was more than adequate to cover any losses that might occur,” it finds.

Just a day before the guarantee, external advisors Merrill Lynch had also told the Government: “Liquidity concerns aside, all of the Irish banks are profitable and well capitalised.”

PAC concludes that the evidence shows how “ill-prepared the State was when it came to handling the banking crisis”.

TDs in their report conclude that it would be “dangerous to make an assumption that the public authorities have addressed all deficiencies”.

In addressing future banking concerns, it proposes that banks should report to the Central Bank on the number of sustainable mortgage solutions agreed with borrowers and this should be audited.

Furthermore, audits should be undertaken next year to assess how banks are meeting their lending targets and these should be made available to Oireachtas committees for examination.