Tag Archives: Banking Inquiry

From top: Sunday Business Post; Tom Lyons and Denis O’brien; the Banking Inquiry’s core book of evidence related to PwC 

This morning Paul O’Higgins SC, for businessman Denis O’Brien, continues his cross examination of former editor of the Sunday Business Post about his articles on March 15, 2015, pertaining to a 2008 PricewaterhouseCoopers report.

Mr O’Brien claims the articles were defamatory of him.

The Sunday Business Post denies this.

The confidential PwC report was a Government-commissioned report in which PwC listed the top 22 borrowers of Ireland’s six banks in 2008. The Sunday Business Post reported that PwC recorded Mr O’Brien as No.10 on the list.

In November 2008, after getting the PwC report, the then Taoiseach Brian Cowen told the Dail that Ireland was right to guarantee the banks in September 2008.

He also told the Dáil that there was enough money in Ireland’s banks for the next three years.

The Sunday Business Post reported that the PwC report showed it believed – in its worst case scenario – Ireland’s banks would lose €10.6billion.

Ireland would eventually go on to get a EU/IMF bailout for €64billion in 2010.

The jury in the High Court, before Justice Bernard Barton, has heard that the Sunday Business Post reported in one of the articles:

“[Denis] O’Brien he went on to repay all his debts to Anglo. He is one of AIB and Bank of Ireland’s best clients.”

It’s also heard, on a number of occasions this week, how Mr Lyons destroyed his copy of the PwC report on St Patrick’s Day 2015 by putting it through a shredder in the offices of the Sunday Business Post.

He said he did this to protect his source as he believed the document was traceable.

Mr O’Higgins SC, for Mr O’Brien, quipped yesterday that this was like the “St Patrick’s Day massacre” – a reference to St Patrick’s Day in 2008 when €3.5 billion was wiped off the value of stocks on the Irish Stock Exchange.

A common refrain from Mr O’Brien’s legal team is that they have not seen the PwC report.

When it was put to Mr Lyons by his own counsel Michael McDowell SC that it was Mr O’Brien’s case that he was “the odd man out”, that he should never have been put in the articles with the other 21 men – and that to do so was “defamatory, gratuitous, unnecessary” and done of out of “malice” – Mr Lyons said: “Jesus, that’s nonsense.”

Mr Lyons also said he found it “shocking” that Mr O’Brien said he wouldn’t put it past Mr Lyons to just stick Mr O’Brien into the articles.

Mr Lyons rubbished the suggestion that Mr O’Brien was the victim of some kind of “crazy conspiracy” cooked up by him and the former editor of the Sunday Business Post Ian Kehoe.

The jury has also heard that at the time that the articles were published – in March 2015 – the Banking Inquiry was under way.

It heard that the inquiry contacted Mr Lyons for a copy of the PwC report.

But, at this point, Mr Lyons said he had already destroyed it.

Asked earlier this week if he was surprised when the inquiry asked him for the report, Mr Lyons said:

“It did surprise me. I had this suspicion they hadn’t got it. It was a gut instinct. But when it came out that they hadn’t got it, I was very surprised.”

Further to this…

In PwC’s core book of evidence for the Banking Inquiry – which is publicly available online – one section of it’s evidence appears to match the headline figures reported by the Sunday Business Post on March 15, 2015.

The item is headlined:

The top 22 exposures across the six institutions we have reviewed total 25.5 billion of which 13.7 billion (53%) is in Anglo and 8.1 billion (32%) in AIB.

Although redacted, the list of the amount owed by the 22 borrowers in the Banking Inquiry’s PwC summary (page 155) matches the amount owed reported by the Sunday Business Post here

The PwC core booklet can be viewed here in full

The case continues.

Update: Meanwhile, in the High Court

Yesterday: “He Thinks It’s All About Him”

Meanwhile, In The High Court

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A screen grab from The Irish Times this evening

Following on from the publication of the Banking Inquiry report

The Irish Times has published a video of witnesses who used the word ‘regret’.

The video included clips of Gerry O’Regan, former editor of the Irish Independent, Tim Vaughan, editor of the Irish Examiner, and Ed Mulhall, former head of news and current affairs at RTE.

The report found that property revenue for the Irish Times ranged from €10 million in 2002 to €22 million in 2006 – at its peak, accounting for 17% of the newspaper’s total revenue from all sources. The equivalent figures for the Irish Examiner and Independent News and Media were 7% and 14% respectively.

But what of former managing director of the Irish Times Maeve Donovan and former editor of the Irish Times Geraldine Kennedy – who don’t feature in the video?

Well, they had no regrets.

From Ms Donovan’s testimony

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Good times

Regrets, they’ve had a few. But can you guess how many? (Irish Times)

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This afternoon.

The AV Room, Houses of the Oireachtas

The Banking Inquiry committee (chaired by Ciaran Lynch, above) launches its report into the financial collapse.

The 375-page document has found politicians from all major parties were “complicit in backing financial plans which contributed to the crash”.

More as we read it.

Watch live here




Central Bank governor Patrick Honohan at the Banking Inquiry last June

RTÉ reports:

The banking inquiry has found that both the Financial Regulator and Central Bank had sufficient powers to intervene in the banking sector to protect the financial stability of the State, but neither intervened decisively.”

“In its final report, RTÉ News understands that the committee says the Financial Regulator also failed to identify the systemic risks building up in the banking sector.”

Meanwhile, on RTÉ’s News At One, journalist Sandra Hurley reported that the full report is expected to be published on Wednesday.

She added:

“There will be some criticism that a lot of this we heard before but I suppose the difference now is that these are the findings of an official parliamentary inquiry so it puts the narrative on a sort of official basis and also, next week, we’re also expecting to see 1,400 documents – many of which have never been published before. And that, again, will also add to our understanding of what happened.”

Systemic risks building up in bank sector not identified – Report (RTE)


From top: Matthew, Mark, Luke and John with Jesus (centre); Dan Boyle

Pray silence for a biblical struggle to find the gospel truth.

Dan Boyle writes:

In the beginning there was meant to be the word. But before the word was written there were arguments about how it should be written. Who should write the word. Against whom should the word be directed.

It was thought that too long a period of time had elapsed, from the events that had happened, to allow these articles of faith to be written as the best representation of the story as it was.

Different authors approached the subject from different perspectives. Mark’s approach being radically different from all others. Between them they differed in the depiction of events – in what order they had occurred; who had been involved and sometimes what was the moral to be learned.

And thus it was decided that all the accounts should be put together to form a Gospel. For despite differing from each other it was felt that collectively they would reveal a truth.

There were to be critical references of priests and politicians, but not enough to affect their status. Strong words were raised against the moneychangers for their activities in the Temple. Even though they were shamed, they didn’t seem to go away. Before long the moneychanging continued as if nothing had changed.

At times the stories pleased. So many people who were without. So few loaves and fishes. Yet somehow, for a short while, everyone was made feel happy.

However there much in this story that has never been told. It was if a boy had jumped into the life of a man several decades older.

During this interval there were some who had foretold of the Coming. Who told of how the river would become a Flood. Few chose to listen then. It seems many are not listening still.

Those who had come from Rome wanted things to be done differently. While an occasional blind eye would be turned to the odd local idiosyncrasy, this treatise of Rome rule would become the new home rule.

On what each writer of this scripture could agree was that tragic events had occurred, events that required redemption.

Was this to be the new testament? Many wanted to believe yet some could not see how it differed from the old testament.

They had read the Books of Hamilton, of Mahon and of Moriarity, initially with a great deal of hope but always leaving a bitter aftertaste of disappointment.

How would the Report of the Committee of Inquiry into the Banking Crisis be any different?

Dan Boyle is a former Green Party TD. Follow Dan on Twitter: @sendboyle

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Watch the banking inquiry live here

Read Fintan Drury’s evidence in full here

Read Brian Cowen’s evidence as Taoiseach here and as Finance Minister here

Previously: ‘At No Point Was There Any Discussion Whatsoever About Anglo’

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Former non-executive director at Anglo Irish Bank Fintan Drury arriving at the Banking Inquiry this morning

You’ may recall yesterday’s post containing the bulk of former CEO of Anglo Irish Bank David Drumm’s statement to the Banking Inquiry.

It came ahead of former non-executive director at Anglo Fintan Drury’s appearance at the inquiry this morning. Alan Dukes and Mike Aynsley are also scheduled to appear today before the inquiry takes a break for the summer.

In his statement, Mr Drumm claimed Mr Drury acted as an intermediary between Anglo Irish Bank and Brian Cowen.

Mr Drumm also claimed, “In April 2008 the Board of AIBC held a private dinner with Mr. Brian Cowen, TD, then the Minister for Finance and Taoiseach elect. I sat next to the Minister and it was the first opportunity I’d had to speak with him privately. We discussed the difficulties in the financial markets at that time” contradicting what Mr Cowen told the Banking Inquiry recently.

Mr Drury’s appearance was to begin at 9.30am this morning but it has been delayed.

Mr Drury, a college friend of former Taoiseach Brian Cowen and whose corporate communications consultancy company Drury Communications advised Anglo, was a non-executive director at Anglo Irish Bank from 2002 until 2008.

He founded Drury Communications in 1988 and retired from it in 1999.

Mr Drury was also on Anglo’s Risk and Compliance Committee

He was also an RTÉ reporter in the 1980s and presented Morning Ireland. He was chairman of the RTÉ Authority from mid-2005 until his resignation in January 2007.

Ciaran Hancock, of the Irish Times, spoke with Keelin Shanley this morning in light of the delay in this morning’s proceedings.

Ciaran Hancock: “When I was last with you [at 10am] they [the inquiry’s committee] were considering whether or not to publish the witness statement belong to David Drumm, they’ve had that meeting and they’ve decided to suspend publication pending further dialogue with the Director of Public Prosecutions so they’ve basically shelved the matter, if you like, for now. And then in relation to Fintan Drury, he was originally supposed to have appeared at half past nine, that didn’t happen, there were some delays, private meetings about the Drumm situation. He was then to appear at 11am and then we were told it was going to be 11.30am. He still hasn’t appeared. The committee is going to convene again, at around about midday and they’re going to consider, apparently Mr Drury has indicated that he wants to introduce new evidence to the inquiry today. So the inquiry’s legal team has had to consider this. They’ve been consulting with Mr Drumm, they’re going to be considering with the committee members now shortly. And it’s a question of whether this evidence can be introduced or not and whether it actually falls within the terms of reference of the inquiry.”

Keelin Shanley: “So new evidence from Mr Drury and a decision to abide by the DPP’s ruling on the evidence of Mr Drumm. In relation to Mr Drumm’s evidence is that the last, or statement rather than evidence, is that the last that we will hear of it at this point? Do you believe?”

Hancock: “No, I don’t think so. I mean they’ve been very careful about their language. They say they have suspended publication, so they haven’t definitely ruled out publishing David Drumm’s witness statement at some point. But they’ve suspended publication and they’re going to have, they’re going to seek further clarifications from the DPP in relation to this. Now, you know, people might wonder at this stage, given that there’s been so many leaks of the Drumm statement and if you look hard enough on the web you’ll actually find the whole thing. What the problem is in relation to this, but anyway the DPP has taken a very strong line, the DPP doesn’t want the witness statement published. Some banking inquiry members feel it shouldn’t be, or at least, some of it should be maybe some parts should be redacted but, they’ve decided to seek further clarification from the DPP as to whether or not they can publish at least some of it.”


Hancock: “There’s also, apparently, there’s words that Fintan Drury is due to take a flight somewhere later on today so a question mark over exactly how much time he has or whether the committee will facilitate him to take that flight or will they want him to give that evidence regardless of whatever arrangements he’s made for later in the day.”

Listen back in full here

Bank inquiry to further suspend publication of Drumm statement (RTE)

Previously: David Drumm: My Version

Sasko Lazarov/Rollingnews.ie

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From top: Fine Gael TD Eoghan Murphy and former non-executive director at Anglo Irish Bank Fintan Drury at the Banking Inquiry this morning

Former non-executive director at Anglo Irish Bank Fintan Drury is giving evidence at the banking inquiry.

He first took questions from Fine Gael TD Eoghan Murphy.

Eoghan Murphy: “Are you saying that when you were an non-executive director of Anglo Irish Bank, you never made a contact with the Minister for Finance or the Taoiseach on behalf of the bank?”

Fintan Drury: “Yes.”

Murphy: “Well I’m sorry, how can you explain then, the phone call you organised between Sean Fitzpatrick and…”

Drury: “Sorry, I beg your pardon, I thought that, I assumed given that I’ve given a clear account of that that you were asking, you know, beyond that..”

Murphy: “No I’m asking why in your written statement…”

Drury: “Sorry…I beg your pardon..”

Murphy: “In your written statement you said you believed you were not equipped to answer on the appropriateness of relationships between the Government and the banking sector. And when I asked you to elaborate on that, you said that you were here to account for your role as a non-executive director of Anglo and that that didn’t pertain to my line of inquiry and then I asked you if, as a non executive director, did you make contacts on behalf of the bank with the Government, to which then I think – in a long-winded answer – that you did not but in fact, you did.”

Drury: “Yeah but with respect, I mean, I absolutely accept that..”

Murphy: “I want to clarify that because..”

Drury: “No it’s…”

Talk over each other

Drury: “But I had, it wasn’t as if I wasn’t alluding to that or never made that clear. I made that clear in my opening statement this morning.”

Murphy: “It’s just that it wasn’t acknowledged in the written statement that you didn’t supply and I was wondering why and you’ve tried to explain that. Can I ask you then just to clarify. The contacts that you laid out to us, in your opening statement. Are they the only contacts that you made on behalf of the bank, with a member of Government?”

Drury: “As far as I can recall: yes absolutely.”

Murphy: “Do you recall a board meeting in early 2008 in which the possibility of the NTMA placing further deposits in the bank was discussed?”

Drury: “Well, em, if you wished, if you wish me to deal with that…”

Murphy: “I’m talking about an article from the Irish Independent which discussed, or which details a board meeting that was held in early 2008 at which the placing of deposits by the NTMA with the bank was discussed.”

Drury: “Well the position in respect of this…”

Chairman Ciaran Lynch: “Sorry Mr Drury, are you familiar with the article?”

Drury: “I’m not familiar with the article but I’m familiar with the source of the article so I’m happy to deal with the question if that..”

Talk over each other

Drury: “The article is based on information which, the source of that, for that article, everyone in this room knows what the source of that article is.”

Murphy: “I don’t know the source of that article. This is an article provided by the legal team this morning, chair. It’s from the Irish Independent. It’s entitled, The political contacts and controversies inaudible from May 2014, I think.”

Drury: “I never discussed, at any board meeting making contact with either an individual, i.e. Brian Cowen as Minister for Finance or the Department of Finance, in respect of any issues regarding Anglo Irish Bank. I never would have allowed any discussion arise at a board meeting of Anglo Irish Bank or Paddy Power where there could be potential for a conflict between my role as a board member and my relationship with Brian Cowen.”

Murphy: “Ok, thank you. We’ll move on to the Heritage dinner if we may.”

Drury: “Sure.”

Murphy: “Just to clarify some things around…you arranged the dinner, is that correct?”

Drury: “Well, I, as I explained in my, as I explained in my opening statement, deputy, I, it fell to me to see whether Brian Cowen would be prepared to attend what initially was going to be a lunch in the manner in which other public servants, public servants and senior politicians, political figures had over the ten years or so, as I’ve explained in my opening statement. And because I was known to be a friend of his [Brian Cowen] I approached him and asked him if he would do it. It was then the organisation of the dinner would have been managed by other people within the bank.”

Murphy: “Do you see a possible conflict of interest in using a friendship with the Taoiseach or the Minister for Finance to set up these types of contacts, to set up these dinners?”

Drury: “Well, you’re referring to these types of contacts.”

Murphy: “Sorry this dinner in particular.”

Drury: “Absolutely not.”

Murphy: “And you attended the dinner with Mr Cowen. How long did it last for can you remember?”

Drury: “I think about 90 minutes.”

Murphy: “And do you recall any formal presentations or documents.”

Drury: “There was none.”

Murphy: “None? Do you recall Mr Cowen arriving with a document.”

Drury: “I arrived with Mr Cowen. He did not arrive with any document.”

Murphy: “And he didn’t leave with any document?”

Drury: “And he didn’t leave with any document.”

Murphy: “OK.”

Drury: “Because I left with him.”

Murphy: “And can you recall from the dinner, any discussions surrounding problems with funding for Anglo?”

Drury: “Absolutely not. I mean I can recall other things, I would recall it if such a discussion had…”

Murphy: “No discussions around NTMA?”

Drury: “No but there was no general discussion around the NTMA, if you follow me.”

Murphy: “Moving on to the other occasion then, the Druids Glen outing.”

Drury: “Yeah.”

Murphy: “That was, was it lunch, golf and then dinner? Is that correct?”

Drury: “A meeting over coffee and then three of us went to play golf and then the five of us had dinner with, we were joined by Brian Cowen’s driver.”

Murphy: “And how long of a total engagement are we talking about in regards to the interaction between Mr Cowen and the representatives of Anglo Irish Bank?”

Drury: “Well, first of all, we weren’t representatives of Anglo Irish Bank. So let’s be clear that Gary McGann was chief executive of Smurfit Kappa, Sean Fitzpatrick was chief executive of Anglo Irish Bank, Fintan Drury was a former director of Anglo Irish Bank, not at that time, and Alan Gray was a director of the Central Bank. So, and they were, they were selected for that discussion on the basis that, prior to going on holidays, I had had a discussion with Brian Cowen about the value of having a number of smart people around a table to discuss with him some of the more substantive economic issues that, not just economic issues but primarily economic issues that were facing the country at the time and which he, as Taoiseach, might do to get some outside perspective. And Brian Cowen was pretty concerned that there would be any misunderstanding by anyone who would be approached and asked to be involved in such an exercise that he was in some way creating a kitchen cabinet. This was a kind of one-off discussion to explore areas that outside people might be able to give him guidance on.And the reason the people who were at that event were chosen because it was a combination of people I know and people who Brian knew. Brian had great belief in Alan Gray, as many people in politics and in the civil service do so he wanted him there. I knew Alan but not well. He wanted Gary McGann there because, as I referred to in my opening statement, he had a view that Gary was very smart, very committed to public service, he was I think at the time a former chairman, if not still chairman of the Dublin Airport Authority, had committed himself to a number of roles in public service but he was also chief executive of one of Ireland’s largest companies which had a global reach and Sean Fitzpatrick was my suggestion. And the suggestion was made at the time when Sean Fitzpatrick was deified. It’s an exaggeration but his reputation was both globally and in Ireland extremely high and he was seen as somebody who was extremely bright and extremely talented and would have therefore value to add. And it was done on that basis.”

Murphy: “At any point was Anglo Irish discussed?”

Drury: “No.”

Murphy: “At any point was liquidity or solvency issues in the bank discussed.”

Drury: “No, no, actually interestingly, the agenda which Alan prepared and brought with him, when we gathered had to my memory had no reference to the kind of issues which dominated subsequently, if you follow me like the ones your referenced.”

Murphy: “You were there to discuss the economy and what was happening globally.”

Drury: “Yes.”

Murphy: “And at no point, the banking problems that had already begun in 2007 came up? Northern Rock? Bear Stearns?”

Drury: “Yeah, I mean I’m not saying that, you know, there was no discussion about the fact that there was a, a very significant global, the start of, more than the start, the emerging economic difficulties which were partly being fuelled by significant financial difficulties. I’m not saying that that wasn’t the backdrop if you like. But what I’m saying to you is, to be clear, deputy, what I’m saying to you is, is that at no point was there any discussion whatsoever about Anglo Irish Bank and the question I posed in my opening statement was to say well, ‘why would there have been…'”

Watch live here

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Former Taoiseach Bertie Ahern

Former Taoiseach Bertie Ahern appeared before the Banking Inquiry yesterday.

Some highlights:

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: “No.”

Murphy: “Okay.”

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?”

Murphy: “Yes.”

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?”

Ahern: “Yes.”

Murphy: “You were aware of that problem?”

Ahern: “Yes.”

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?”

Ahern: “No.”

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.”

Ahern: “Well—–”

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?”

Ahern: “Never.”

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