Banks to be asked to help pay for inquiry

Banks are to be asked to cough up some of the cost of running the banking inquiry which will examine decisions and actions of some of their top executives in the run up to the €440bn state guarantee.

The inquiry may be in line for another boost to its work, with the ECB indicating it will review its policy of withholding a letter sent to former finance minister, Brian Lenihan, on the night before Ireland entered into the EU-IMF bailout.

Despite pressure from the European ombudsman, the ECB has previously refused to release the November 2010 correspondence which is believed to have forced the Government into accepting the bailout without burning the banks’ senior bondholders.

In correspondence to the Fine Gael MEP, Sean Kelly, the ECB said would review the matter in light of the stress test on banks which were published on Sunday.

Chairman of the banking inquiry, Labour’s Ciarán Lynch, did not wish to comment on the possible publication of the letter, but said: “I would be of the view that all of the agencies, particularly those concerning the governance of banks, such as the ECB, will co-operate with the committee and accommodate our requests to the fullest extent possible.”

The 18-month inquiry is expected to cost between €5m and €6m, made up of staff salaries, allowances, research and legal advice, as well as upgrading Leinster House facilities to provide state-of-the-art technology for a televised inquiry.

The 11-member team has been asked by Oireachtas authorities to be mindful of the cost of its work to taxpayers. It has also been asked to submit reports every three months on how much it is spending. This will be published online.

The minutes of the latest meeting of the Houses of the Oireachtas commission, which oversees the running of the parliament and its committees, says its members “underlined the importance of the efficient use of public resources” in the running of the inquiry.

It said: “The commission requested that a contribution towards the cost of running the inquiry be sought from the financial institutions involved in it.”

It’s understood the mechanisms to secure funding from the banks will be dealt with by the commission, and not the committee.

The inquiry will hold its first hearings before Christmas. The first witnesses will be the authors of previous reports into the crisis including Finnish academic, Peter Nyberg who reported in early 2011, and Klaus Regling and Max Watson, who reported in June 2010.

The inquiry will examine the role of bankers who were in charge at the time, and the auditors who signed off on accounts for the banks. It will look at the role of state institutions such as the financial regulator, the Central Bank, and the Department of Finance.

The process of recruiting a number of experts to help with its work and provide “specialist services to the committee” will begin in the coming weeks.

Mr Lynch told the Irish Examiner the committee is “very conscious of the costs that will arise during the inquiry” and “will ensure that those costs will be met in a measured way.” He also said there will be “full accountability” with a detailed breakdown of costs published at regular intervals.