THE FIRM of solicitors advising the Government on its banking policy has acted for the Mallabraca consortium, which expressed interest in buying into the Bank of Ireland.
Arthur Cox solicitors also act as solicitors for the Bank of Ireland, one of the banks whose deposits have been guaranteed by the State and who are the subject of the Government’s proposed multi-billion recapitalisation package.
A spokesman for Minister for Finance Brian Lenihan said Mr Lenihan had been assured that where potential conflicts arise they are dealt with through “Chinese wall” structures.
A spokesman for Arthur Cox said the firm does not act for Mallabraca. Asked whether it had in the past, he said the firm could not comment on client matters. However, it is understood the firm did provide legal advice to Mallabraca in its initial stages.
Filings in the Companies Registration Office show the company secretarial services division in Arthur Cox acted for Mallabraca at the time of its incorporation in November of last year. The spokesman for Arthur Cox confirmed this was the case, but said Arthur Cox does not now provide secretarial services to Mallabraca.
When asked twice previously by The Irish Times– the most recent occasion being last Friday – about Arthur Cox's involvement with Mallabraca, the spokesman denied that there was any.
The Mallabraca consortium had involved US private equity firms JC Flowers and the Carlyle Group, investment managers Nick Corcoran and Nigel McDermott, and Middle Eastern sovereign wealth funds. It was interested late last year in taking a substantial stake in Bank of Ireland. Its current view is not known.
Arthur Cox managing partner Padraig O’Riordan has been providing advice to Mr Lenihan since September of last year.
In December, Fine Gael deputy Phil Hogan asked Mr Lenihan in the Dáil what steps he took to ensure external advisers were not also involved in advising financial institutions covered by the guarantee scheme or consortia seeking to invest in such institutions, in view of the need for the State’s interest to be protected.
He asked whether the engagement of such advisers was on condition that they could not act for concerned commercial interests.
Mr Lenihan said that in Ireland it was not unusual that one of the larger financial or legal advisers had to deal with potential conflicts of interest. “I have been assured by my external advisers on the bank guarantee scheme that where potential conflicts arise they are dealt with through the application of well-established ‘Chinese wall’ structures which are overseen by their compliance departments,” he said.
“These ‘Chinese walls’ operate as information barriers which ensure that any advice given to the Government is confidential and is provided by a team which is segregated from and independent of their work for other clients.”
