Bertie [Ahern] and Michael Lowry shooting the breeze at Croker [Croke Park, Dublin]…Insert caption here [below].
Former Taoiseach Bertie Ahern
Former Taoiseach Bertie Ahern appeared before the Banking Inquiry yesterday.
On the Irish economy at the time of his stepping down
Chairman Ciarán Lynch: “At the time of handing over to Mr. Cowen as Taoiseach, did you believe that the fundamentals of the Irish economy was sound at that time?
Bertie Ahern: “Definitely, and I believed that all of the indicators from the Department of Finance economic review of 2008 to 2010, from the IMF, the ESRI and all of the others were indicating that we would grow between something from 3% to 5% over the years immediately ahead.”
On how his opening statement is very similar to his autobiography
Pearse Doherty: “Mr. Ahern, it’s the second time I’ve listened and read some of the testimony and maybe you’ll start by explaining why parts of your opening statement to the banking inquiry are taken directly, word for word, from your autobiography?”
Ahern: “Because that was my position when I did my autobiography and I haven’t changed the position. I’m consistent.”
Doherty: “And the years haven’t … you haven’t reflected on those positions here? You’re happy with what … as time past, you haven’t changed your position on it?”
Ahern: “I haven’t changed my position.”
On proposals to abolish property-based tax incentives and on whether they helped create Ireland’s property bubble
Doherty: “In 2004, very soon after coming into office, the Minister for Finance commissioned two reports on … to review property-based tax incentives, which had already been extended from 2002 to 2004 by his predecessor. Who decided to commission these reports, Mr. Ahern, and did you support the decision or did you argue for the abolition of these tax incentives in 2004, as was originally planned but never actually happened?”
Ahern: “No, I don’t … I don’t think I argued for the abolition. Remember, there were about 24, was it, 24 different taxes. Some of them were expensive; some of them were not. Some of them were very beneficial; some of them were dubious whether they were or they weren’t. And the view, when Minister Cowen, and I remember him well, he was very anxious to deal with them. It had been a departmental view, I think Mr. McNally has informed you of that, and that was the view of the Department. But I think, as you know, Deputy, from the time a lot of the incentives came in, in the urban renewal in 1986 by the Garret FitzGerald … the late Garret FitzGerald’s Government, they were forever being extended.
Doherty: “But they were supposed to cease in 2004—–”
Doherty: “—–did you support the extension of the reliefs from 2004 to 2006, even the ones that you say today that may have been dubious?
Ahern: “Oh, I support them. I support them.”
Ahern: “—–I was just going to say that I think I was meant to end some of them back in 1993.
Doherty: “…do you believe that the extension of these property reliefs to the construction sector sustained and helped create a property bubble?
Ahern: “Yes, I do.”
Doherty: “Okay, and when did you become of that view?”
Ahern: “It probably would be about 2009.”
Doherty: “So you didn’t believe that there was a property bubble prior to May 2008 at least, when you left the Office of the Department of the Taoiseach, but you did believe that there was a property boom in 2006 that was getting boomier; is that … would that be correct?”
Ahern: “Well, I wanted to … Deputy, I wanted to see it slow down. I had broken my back from 1997 to try to get the supply side … when I came in as Taoiseach, there was, in the Central Bank’s terms, a bubble, or at least shortly afterwards. we had moved from building 20,000 houses in 1990 to 42,000 houses when I came into office. It was believed at that time by all the experts that we needed to get to 50,000 to take the heat out of the market. Everything we did, and the Bacon reports and all of the other efforts that were made, were all to try and get supply up and we believed that if we got supply up, we’d get an equilibrium that would balance the situation—–
On the Galway tent
Ahern: “…there was no big deal. There was literally no big deal between the connections in the Fianna Fáil tent and the construction industry. It was a social occasion and I wish I had been able to influence maybe some of those people but I don’t … I heard your questions previously about this and you [Pearse Doherty] seem to have a bit of an obsession with the Fianna Fáil tent, as many people have. But it wasn’t any big deal and there was no big business done. And I assure you this, Deputy, I assure you this. And I wish it had been different, that I had known the extent of the exposure from some of those people, and there was some of them, that they had to the banks. Because in the last seven years, as you’d appreciate, I have had good, sensible conversations with many decent people and they believe that not alone did I know the figures but that I had the files, and that I knew exactly what every developer in this country owed and what exposure with the banks. But the fact is, as you know, Deputy, I had none of that information because I wasn’t entitled to any of that. That’s a matter under AK33, which is totally confidential and only the Central Bank and the regulator had it.”
On his interaction with property developers
Ahern: “I don’t believe that I, personally, had much interaction with property developers. I did deal a considerable amount with the CIF. They were one of the social partners. Regularly I dealt with them in the sectoral meetings of social partnership and, as your book of evidence shows, I had a number of meetings with them, not that many, but they did come in to state their case. But in no way do I think any of the political activities of the party I was a member of in any way influenced any of the decisions that we made.”
On his suicide comment
Ahern: “I had two very good friends who died from suicide in the ’90s. I never should have said that. And three minutes after I came off the stage, I apologised for that. That was just a totally wrong thing to say. But what I was talking about that day was confidence, that yes things were getting more difficult, and was before liquidity. But I was talking to the Irish Congress of Trade Unions in Donegal and I was saying “Listen, we have to have confidence, we have to have belief, we have to work together, we have to pull together.” And I’m sure you’ve seen that speech. And, unscripted then I, unfortunately, said that and, of course, like lots of things in life, everyone forgets what I said in the rest of that speech. But I think that speech was a speech of trying to give confidence and stability and I don’t think there was anything wrong that.”
On the 2001 EU Council censure against Ireland for its failure to use fiscal policy to ensure economic stability after joining the Eurozone and the 2011 Wright Report which found Ireland failed the test of prudent fiscal management
Eoghan Murphy: “…on page 48 of the Wright Report, it says that, when talking about the monetary union, the impacts on the Irish economy and what should have been done with fiscal policy, it says, “Ireland failed the test of prudent fiscal management.” Do you accept that?
Ahern: “I accept it now in hindsight because we would have built up bigger balances. But can I say at the time, Deputy, we still had over 10% unemployment. We still had an inability to give jobs to the young people in this country. And it seemed to me … and today if it weren’t have been for what happened … to be writing down debt, which we were, substantially, saving interest payments, growing the economy, creating jobs, bringing in foreign investment, spending on infrastructure, having a balanced budget and creating surpluses. You know, if that wasn’t complying with what he wanted us to do, I don’t know what was.
Murphy: “That’s not what I wanted you to do, Mr. Ahern, but does that mean that you didn’t … that you ignored the censure from the Council?
Ahern: “No, I—–”
Murphy: “If you accept what Mr. Wright says, that we failed the test of prudent fiscal management, and Mr. Cowen accepted that as well when he was before us, does that mean you ignored the European Council?
Ahern: “If you asked me to say now, if you asked me to say now … should we have built up more balances if we knew there was going to be a bust in 2008? Yes. If you ask me from the position where I was Taoiseach … chairing the Cabinet in 1998, 2000, where we had unemployment and a whole lot of infrastructure which we had to deal with, and a demand to try to bring up the country to EU averages, then the answer was no at that stage. Like if hindsight was foresight, you know, I’d be a billionaire and so would you. But at the time I thought what we were doing was conservative. And in fact I was considered a conservative at that stage.”
On warnings from the Central Bank
Murphy: “I want to stick to looking at what was being warned … the warnings from the Central Bank in relation to the budgetary policy of your Government. If we look at the Central Bank pre-budget letter … towards the end of 2000, this is for the budget for 2001. It warned that despite the strong surplus position the case against an expansionary budget is convincing, as this would heighten the risk of a hard landing for the economy. Did you ignore that advice when agreeing the budget for 2001?”
Ahern: “I don’t think the Minister did, quite frankly … I think—–”
Murphy : “Even though the next two budgets were expansionary budgets, going against the advice of the Central Bank.”
Ahern: “2001 to 2003 … after the dotcom, or during the dotcom period, were not considered expansionary budgets. You know, taking into account the fact that we had a lot of money into the system and, you know, we had a growing economy.”
Murphy : “I’ll just cut across, Mr. Ahern, sorry … just … because the figures shows that in 2002 spending was 22% up on the previous year for the first six months. Is that not expansionary?”
Ahern: “The … what was the current budget deficit in 2002?”
Murphy: “Is that not expansionary, Mr. Ahern?”
Ahern: “No, but what’s the current budget deficit? Like, with the greatest respect, if you’re the Minister of Finance and the Department of Finance and you’re devising your budget and I’ve been lucky enough to be at a Cabinet table, I think, for about 20 of them, you’re looking at what your current budget deficit is, you’re looking what your Exchequer borrowing requirement is, you’re looking at what your debt-to-GDP ratio is, you’re looking at what your income is and you’re taking all these things into account. I’m not disagreeing with … but I’m just saying, Deputy, you can’t take one in isolation from the others. That’s all I’m saying to you.”
On the Nyberg Report
Murphy: “Do you accept the findings of the Nyberg report on page 4, where it says: “As demonstrated by the previous scoping reports, although clearly affected by external conditions as set out above, the Irish crisis was in all essential aspects home-grown.”?”
Ahern: “Yes, I read that. I’m not sure; I’m not sure.”
Murphy: “You’re not sure.”
Ahern: “I’m not sure.”
Chairman: “Could you elaborate on that level of uncertainty?”
Ahern: “Yes, I don’t … there were two major things happened, Chairman. The amount of taxation that was directly related to the residential … to property was too high … too high and, you know, I accept responsibility for that. I was head of Government … 24%, almost 25% in the economy, you know … you know, that was ghastly when you look back at it … you see it. On the other side, you look at what the banks did … you know, the Nyberg report, all that happened on the banking side. But the bit I’m not too sure of … the international crisis that came on top of it … talk about all the cards being played against you in one go, Chairman. I think sometimes we forget … internationally … just the extent of what was happening worldwide in those few months. Rightly so, we looked at what was happening in Ireland and how it was effecting us and the banks … and … but look at what was happening worldwide, the extent of the investment bank system … the banking system put the world under … to get that on top of our problems … I’m not defending our problems. I’ve said the two vulnerabilities that were there – one I take for responsibility for, I take no responsibility – none – for what was happening in the Central Bank or in the Financial Regulator because I had no knowledge or control over it, despite what people think and accuse me of. But the international hit … the international hit was just massive and I think that … to, kind of, say that had nothing to do with it does … I’m not … if I was here with him, I had have an argument with him but he’s not. But I just think that is too harsh a statement and I would like be able to argue that point with him.”
On the setting up of a domestic standing group and the ‘green jersey’ agenda
Murphy: “Thank you, Chair. Just to move on then, if I may, Mr. Ahern, to 2007 and you established the domestic standing group. Did you pay any attention to its work?”
Ahern: “The domestic standing group?”
Ahern: “No, not a lot. I knew it was there. I’ve said what I said in my statement about it. I was aware that they were meeting but we did not receive the reports in the Department of the Taoiseach from it. We weren’t … we didn’t participate in it. None of my officials were on it and we weren’t … we were not being briefed and I cannot ever recall being briefed at the Cabinet on it either.”
Murphy: “So were you were aware of the increasing liquidity problem facing the banks from 2007 on?”
Murphy: “You were aware of that problem?”
Murphy: “And did you do anything about it?”
Ahern: “I discussed it. And when I came back from holidays that year, I discussed it with the Governor and we had numerous discussions on the liquidity issue … ongoing discussions all the way from August 2007 right until the time I left. The liquidity issue was … I would have numerous, numerous discussions with the Minister for Finance.”
Murphy: “Were you aware, then, that the Governor of the Central Bank and the Financial Regulator went to each of the banks in March-April 2008, in what was called “the green jersey” agenda – because one Irish bank couldn’t borrow from anyone and another Irish bank couldn’t get any money from the other Irish banks – to ask the banks to lend to each other? Were you aware of that initiative?”
Ahern: “I wasn’t.”
Murphy: “You weren’t aware of that?”
On Mr Ahern previously stating that he would “have loved” if someone had told him about the problems in Irish banks
Murphy: “Okay, so why did you say when you left the Dáil that, ”I would have loved if somebody somewhere had of told me what was going on in the banks in this country, but nobody ever did”, and you just told me that you did know about the increasing liquidity problems facing the banks and you had spoken to the Central Bank Governor about it?
Ahern: “I was talking about the point which I dealt with earlier to Deputy Doherty that the extent that so few people owed so much and with very poor guarantees and very poor stress tests or checks on their ability to be able to deal with those loans. That’s the point I was dealing with.”
Murphy: “And just—–”
Ahern: “I never was given that detail.”
On meeting property developers in Government buildings
John Paul Phelan: “… I’m not going to refer to them all … but over the page on page 71, following on from the letter from Mr. O’Flynn, there’s a briefing note prepared for you, and it’s says:
Meeting With Delegation of Builders to Discuss Housing Issues
Thursday 8 July, 2004 at 2 pm, Taoiseach’s Meeting Room
The delegation comprises:
Michael O’Flynn, O’Flynn Construction
Sean Mulryan, Ballymore Properties
Bernard McNamara, Michael McNamara and Co.
Ken MacDonald, Hooke and MacDonald
Were … did many of these meetings take place in your time as Taoiseach? This seems to … and there’s a reference, I think, in the previous letter to “reassembling” a group of developers to meet you; in other words, that there had been previous meetings. Do you think it appropriate that such meetings happened in Government Buildings? And can you outline maybe a bit of what was discussed?
Ahern: “That particular one was about affordable housing, and for first-time buyers. I think you can, you see it there, with the policies that brought the success we have to make sure that we respond to the problems such as affordability for some buyers. I had been making a number of speeches. And in the Dáil, more than anything, the issue of affordability was a major issue. And that group of developers came with a number of ideas about how it could help and they had ideas about getting land or … you know, in areas in the greater Dublin area where the biggest problem was … where there were big … the old corporation schemes, council schemes, where there was land and that if … a lot of these areas were causing social problems. That if the land … if the local authority would give it to the developers, they could build houses which the local authority then could give to people on the local authority list who wanted to buy houses. So it wasn’t a bad idea or if the State would give land where they … so you’d take … and part of the reason for that, as you know, Chairman, in the late 90s the cost of land was about 13% of a price of a house and it went up to about close enough to 25% of the price of a house. So it was a big factor on affordability. In fact, many of the economists at the time were saying that we should be looking at the land issue as much as any other issue. But that’s what that meeting was about … it was particularly they advocating that they had a social conscience and they would play ball to try to help to deal with the either social-affordable housing. Very little happened out of it because the concepts of taking over the land and taking over land beside—–
Phelan: “Can you see now, I suppose with the benefit of hindsight, and you’ve mentioned hindsight yourself earlier on, that how such a meeting between such a significant group of developers would portray a relationship … could portray, I should say, I can’t lead you, that might have existed between Government and those people at the time?”
Ahern: “Of course, I can understand how it could. But you know, the fact it was with officials I tended as best I could but I can’t say I always did…you know, to make sure I would have an official and it would be properly done. But I have to say, most of the time when it came to their own issues … their own agenda, they didn’t need to come in … they had a very strong lobby with the CIF who were very well resourced and were very vocal and, you know, were after all Departments including me. I tended to meet them regularly in the sectoral meetings around social partnership but—–”
Phelan: “How often would you have met the CIF? Just to … I’m sorry now, Chairman.”
Phelan: “In a year, say, for example?”
Ahern: “In the social partnership concept where everybody was there, I would meet a number of times.”
Phelan: “But outside of that … extra lobbying and everything?”
Ahern: “Except they had some issue where they wanted to come in, not that many times. But they’d show up once or twice a year, you know. They were like the IFA, if anything was around, they were in.”
On meeting the Regulator
Chairman: “How often did you meet the regulator, Mr. Ahern?”
Chairman: “You never met the regulator?”
Ahern: “No. should rephrase, I did attend once a year to the Clearing House annual dinner where I used to do an annual statement of, kind of, what had been achieved and what had for … what’s next year’s agenda. But the regulator I never … sorry, I could have met the regulator at that because he was—–”
Chairman: “Was that as Taoiseach or as Minister for Finance?”
Ahern: “No, that was as Taoiseach.”
Chairman: “As Taoiseach. But that was just, kind of … to paraphrase, just, kind of, a knees-up in the evening where there’s a dinner and there’s a speech and all—–”
Ahern: “Dinner at lunchtime was always a—–”
Chairman: “This would be—–”
Ahern: “But I never … the regulator never, never came in to me.”
Chairman: “Okay, fine.”
Read a full transcript of Mr Ahern’s appearance at the Banking Inquiry here
Bertie on his “commit suicide” comment: “I had two v good friends who died from suicide, I should never have said that”. #bankinginquiry
— Independent Business (@IndoBusiness) July 16, 2015
Bertie on thd Galway Tent: “no big deal” #bankinginquiry
— Paula Ní Chathmhaoil (@FentonMueller) July 16, 2015
Bertie replies “Yes I do” when asked if he still believes the economy was sound when he left office. #bankinginquiry
— Independent Business (@IndoBusiness) July 16, 2015
Former taoiseach Bertie Ahern at the Banking Inquiry this afternoon.
More as we get it.
(Leah Farrell/Photocall Ireland)
Cheeky little divil.
Via Mark Little
Just Bertie Ahern being greeted by China’s Premier Li Keqiang at the World Internet Conference in Wuzhen, Zhejiang province, China.
Thanks James Lloyd
Former Taoiseach Bertie Ahern is introduced as Christie Burke, former prime minister Dublin Ireand at the Guizhou Big Data Industry Convention at the Four Seasons Hotel, Dublin this morning.
Via Graeme McQueen
[Form top Paul Kiely, Jim Nugent and Des Peelo]
Shane Ross went on the Last Word with Matt Cooper on Today FM last night to discuss the latest revelations about the Central Remediel Clinic. He spoke of the senior CRC management and their links to former taoiseach Bertie Ahern
Matt Cooper: “Jim Nugent,… the Chairman and Acting Chief Executive of the CRC, Director at the Central Bank in the boom years, regular donor to Bertie Ahern at the Clontarf Castle and other functions over the years. One of Bertie’s ‘dig-out’ men as well – and now he’s disclosing this?”
Shane Ross: “Well, yeah and also he was director of [state-run tourism training body] Cert…”
Matt Cooper: I forgot about the loans he owes to Danske Bank!”
Shane Ross: “That’s right…”
Matt Cooper: “It was all over the Irish Independent today, what was it, about €9 million?”
Shane Ross: “Yes, €9 million owed to Danske Bank as well – I mean this is an extraordinary man, I asked them [members of the CRC at the PAC meeting] towards the end today, about the link to Bertie Ahern and they all kind of looked at me as if I had two heads, at the idea, that really they could all be there because they had links to Bertie – which is something that apparently had never occurred to them.
But, I mean, you have the most extraordinary coincidence, if nothing else – I don’t believe it is a coincidence, where you have Mr. Nugent who was appointed to Cert under Bertie Ahern’s government, he was appointed to the board of the Central Bank under Bertie Ahern, you have Paul Kiely who was appointed to the CIE board under Bertie Ahern.
“You have Des Peelo, who wasn’t there today, but he was former chairman, who was a good friend of Bertie Ahern’s representative at the tribunal, you have Tony Kent, the Late Tony Kent who was a senior member of the Central Remedial Clinic, who was in the Senate and who was a great friend of Bertie Ahern’s – and you also have Vincent Brady, who wasn’t there today, who was in the cabinet with Bertie Ahern. All, at some stage were on the board of the CRC. Now, they just kind of shrugged their shoulders and said, ‘no, no, no’, and protested that they were all very talented in their own rights, but it was a pretty unconvincing kind of scenario. They were all, you know, pals of Bertie, one way or another – linked to him, one way or another.”
Shane Ross: “….You know, can I just add one thing about the pension pot, which is absolutely extraordinary – the money transferred, over €3 million which goes into this pension pot out of which Mr. Kiely is drawing, but what emerged today was that he’s not getting a pension on the basis of his €106,900, which is what the…”
Matt Cooper: “… Ah, let me guess – it’s on the basis of his top-up as well, is it?”
Shane Ross: “On the basis of his top-up.”
Matt Cooper: “So, he gets the HSE funded salary, he gets a top-up on top of it for all these years that… and then…”
Shane Ross: “And then..”
Matt Cooper: “And then he gets the pension based on the gross amount?”
Gavan Reilly: “The HSE salary was just short of 107,000, and I think the privately sourced bit of it was about another 117,000 – so his net salary was somewhere in the region of about 220,000.”
Matt Cooper: “So, what’s he getting as a pension now?”
Shane Ross: “The pension is higher, it’s higher than his basic salary from the HSE.”
Matt Cooper: “You’re joking?”
Shane Ross: “I’m not, Im actually not.”
Matt Cooper: “That’s typical – but I thought this sort of thing was supposed to be ended when this country went bust a few years ago?”
Shane Ross: “Well, for some people, it didn’t end and for some people, there were no pay cuts. But there are losers here, and Mr. Nugent said today, rather ironically, he said, ‘there are no winners in this situation.’. There are! Mr. Reilly is a winner, there are other winners at the top of the CRC, but there are losers. The disabled people are losers, the staff who aren’t very well paid, are losers. But there certain, there are one or two winners, which is what’s been happening in Ireland today has been happening over the past five or six years.”
Matt Cooper: “Shane, Isn’t the Mater Hospital where Bertie learnt his accountancy?”
Shane Ross: “Yeah, that’s absolutely right.”
Matt Cooper: “He didn’t qualify as an accountant, but he learnt his accountancy up there?”
Shane Ross: “Bertie Ahern came from that stable. Mr. Kiely said today that he didn’t come from that stable, but certainly Mr. [Brian] Conlon came from that stable, there’s another member of the board, whom I think comes from that stable as well. There’s an extraordinary coincidence – and no-one answered the question, but we’ll come back to it – there are extraordinary formal links between the Mater and the CRC, which I don’t really understand.”
Previously: Mr10 Per Cent
(Laura Hutton/Photocall Ireland)