Anglo Irish Bank - High time to stop the secret deals

When the Dáil reconvenes in special session tomorrow, it will be faced with passing legislation to nationalise Anglo Irish Bank.

The Anglo Irish Bank Bill, 2009, was published on Thursday night.

It proposes the appointment of an independent assessor to recommend a “fair and reasonable” sum for the bank’s shares. The declining value of those shares may well comprise a large proportion of the savings of people who have worked and saved for years to fund their retirement.

In deciding a price, the assessor will have to take into account secret information about the bank, which might have persuaded people not to invest in the bank, had they known it in the first place. There has been much too much secrecy already.

Shareholders will not be allowed to make submissions to the assessor, but they will be entitled to appeal any decision to the Irish Financial Services Appeals Tribunal. The tribunal in turn, “may confirm, annul or vary the determination appealed from,” and it may also make other consequential orders.

That will confer enormous power on a very few people. This might be understandable if the determination was being seen as transparently fair, but there is nothing at all transparent about this bill. It provides, for example, that the assessor’s report on the value of bank shares does not have to be made fully public.

“We cannot have transparency behind closed doors,” economics professor Brian Lucey of Trinity College warned. “If we want to persuade the world that we are an open and well regulated system we cannot do that in secrecy.”

The perception is already abroad that our system of regulation — especially in relation to Anglo Irish Bank — has been pathetically inadequate. The Regulator’s Office was aware of the secret loans to directors since late 2007, but failed to act. Now the Government and its agencies must be seen to behave in the most transparent manner possible.

Finance Minister Brian Lenihan said on RTÉ yesterday that Anglo Irish Bank is earning enough money from its loans to cover its liabilities. If that is the case, one would question the hurry for this legislation. But the minister says he is acting on the advice of the Central Bank to ensure the stability of the banking system.

The Government could have called the special Dáil meeting for today, but instead they waited until tomorrow when the eyes of the world will be on the historic events surrounding the inauguration of Barack Obama as president of the United States. While that is going on, the Government plans to ram through the legislation in five hours.

The public is being asked to pay for it, but it is being told it has no right to know what it is essentially buying. This sounds like mushroom management — keep the people in the dark and feed them manure. To restore confidence we need not only good, sound policies, but also transparency in implementing them.