Muammar Gaddafi pulled out of €1.4bn Bank of Ireland deal
The bizarre banking inquiry twist was revealed yesterday as an Irish finance group was accused of lobbying to get Germany’s worst-hit firm included in the guarantee and met with bank risk officers to discuss bird flu — not the economic crisis — in 2007.
Speaking to the inquiry, John Corrigan, the former CEO of the National Treasury Management Agency (NTMA) confirmed the secret December 2010 Libya meeting. Mr Corrigan, who was CEO from 2009 to earlier this year and on Ireland’s troika negotiation team, said on landing in the now war-ravaged north African nation’s capital of Tripoli, officials met the Libyan investment authority.
While he said “we can all look with hindsight” about the unusual event, at the time the Libyan group — controlled by Gaddafi — was “highly regarded” and invested widely. The Gaddafi group planned to invest €1.4bn in Bank of Ireland by buying 24% of ordinary shares from Ireland’s pension reserve fund and €1bn in preferential shares.
However, after some concern from the Department of Foreign Affairs, Mr Corrigan said the Libyans “did not pursue” as they “couldn’t be comfortable” and “weren’t prepared to write a blank cheque”.
The until now hidden banking crisis story led Fianna Fáil finance spokesperson Michael McGrath to ask if the Libyan leader — who was murdered by rebels in October 2011 — had a lucky escape.
Meanwhile, Mr Corrigan said the NTMA did not want Anglo guaranteed in September 2008 as it was an untrusted “bottomless pit”.
While Anglo was eventually nationalised in January 2009, he said it was vital to “get our hands around the neck” of the issue early and he was “taken aback” when he heard the guarantee plan.
Mr Corrigan said Anglo and Irish Nationwide were “insolvent” on guarantee night, and that the NTMA’s refusal to put money into Anglo 12 months earlier should have flagged “very serious” concerns.
The expert said “while I’m not an accountant”, the then financial regulator was “sadly deficient” and described the economic crisis as “domestic”, adding he only backed the bailout as it was “the only show in town”.
At a second meeting, ex-Irish Banking Federation CEO Pat Farrell was asked about alleged lobbying to include a stricken German firm in Ireland’s guarantee, and confirmed banks were more concerned about bird flu in 2007 than the impending crash. Depfa ultimately received a €124bn bailout from its government.
However, its IFSC base led Mr Farrell to email the Taoiseach’s Department on October 15, 2008 asking for it to be included. “You say lobbied, I say passed on information,” Mr Farrell said in response to questions on the issue.
He also said the Irish Banking Federation organised a meeting of banks’ chief risk officers to discuss bird flu as a pandemic could “paralyse” services, but did not raise wider bank issues.
