Taoiseach Brian Cowen has rejected as “innuendo” suggestions that the Government was aware that Irish Life & Permanent had deposited up to €7 billion in Anglo Irish Bank last September, when the bank guarantee scheme was introduced.
During fractious scenes in the Dáil this morning, the Taoiseach also insisted that the decisions the Government had made in relation to the banks were done so entirely on the basis of what was in the public interest at all times.
It emerged yesterday the Financial Regulator is investigating the placing of a €4 billion deposit with Anglo Irish Bank by IL&P on September 30th, the day the bank’s financial year ended. It is understood that deposits placed by IL&P with Anglo during September totalled between €6-€7 billion, although €4 billion was lodged with Anglo Irish on September 30th, hours after the State’s bank guarantee was announced.
The news hit Irish Life shares which lost as much as 19 per cent in early trade and at 3.20pm were trading at 5.7 per cent lower at €2.03 in Dublin.
Mr Cowen rejected a suggestion by Labour Party leader Eamon Gilmore that he was aware IL&P had placed the deposits with Anglo at the time. Mr Cowen declined to confirm, however, on what exact date he did find out about the transfer of the funds.
Mr Gilmore said his party “stood alone” on September 30th and opposed the Government’s blanket guarantee for banks. “We did so because we felt that were not being told the full story and that the taxpayer was not being told what we were getting into,” he said. ““It now turns out that we didn’t know the half of it.”
He said that on that very day, “Irish Life & Permanent was shuffling €7 billion by way of a loan into Anglo Irish Bank in order to make its accounts look good.”
Mr Gilmore demanded to know if Mr Cowen knew about these deposits at the time it was introducing the bank guarantee. He said it was “unbelievable” that the Government was unaware about the interbank transfers. “Did the Government encourage the payment of these loans and when did it first come to your attention?” he asked.
Mr Cowen said he refuted the suggestion being made by Mr Gilmore as “absolutely without foundation”. He accused Mr Gilmore of “throwing innuendo”.
"I was not aware of these arrangements. In fact the board of the directors of [Anglo Irish Bank] weren't aware. It seems to me that not all members of the board were aware of those arrangements," Mr Cowen said.
“The decisions that we made on September 30th were made in the interests of maintaining stability in our banking system and in our economy, based on advice from the Governor of the Central Bank and the regulatory authorities and indeed the Department of Finance and from no other source,” the Taoiseach said.
“I want to make that very clear. That innuendo has been going around now for quite long enough. Everything that this Government is doing in relation to this matter … is on the basis of our assessment of the national interest and the seriousness of the situation which is confronting this country and any suggestion to the contrary I refute.”
Mr Cowen said when the evidence of the dealings between IL&P and Anglo surfaced, the Regulatory Authority and Director of Corporate Enforcement were informed. “The Deputy is trying to suggest something that is simply untrue.”
Mr Gilmore accepted that Mr Cowen was not aware of the deposits on September 30th. However, he said the banks were “making a monkey” of Mr Cowen by not revealing what was going on while the Government was in discussion with them over the bank guarantee scheme. “They were making a monkey out of the public that were being asked to put up the money.”
"You won't restore confidence to the Irish banking system - recapitalisation scheme or no - while we have this drip, drip emergence of one thing after another about what was going on in these very banks," said Mr Gilmore.
Fine Gael leader Enda Kenny earlier accused Mr Cowen of having no idea about the degree of anger being felt by ordinary people over the amount of money being poured into banks by a Government that was simultaneously imposing levies on public sector workers. Mr Kenny said the IL&P deposit with Anglo sent out a “misleading perception of the strength of the bank” and affected the way it was seen by the international market and shareholders.
He asked Mr Cowen how he could justify the level of renumeration to the former chief executive of the Financial Regulator Patrick Neary if he knew about the dealings between IL&P and Anglo. He called on Mr Cowen to reassure the public that people who "abuse" or fail to live up to positions of responsibility will not receive "golden handshakes".
The Taoiseach said the circumstances surrounding Anglo were the subject of investigations by the Financial Regulator and the Director of Corporate Enforcement.
Mr Cowen said the decision to recapitalise Irish banks was designed to restore confidence in Irish banks. A decision on the final amount of money that will be poured into the banks will be made this afternoon.
“We are devising the amount of money that will be required in the interests of the wider economy, of jobs, in the interests of ordinary people conducting their business on a daily basis and having a functioning banking system with which to do it,” he said.
There will be an ongoing evaluation of banks to establish what way risk is managed in the future. “We are conducting in a prudent, cautious and comprehensive way how we maintain stability in the banking system.
Fine Gael Dublin South East TD Lucinda Creighton today called for the Garda Fraud Squad to investigate the conduct of senior board members at Anglo Irish Bank.
"The Fraud Squad is responsible for investigating serious and complex cases of commercial fraud, money laundering, computer crime and breaches of the Companies Acts and the Competition Act. It is therefore the appropriate body to delve into the activities of senior management at Anglo Irish Bank and finally get to the bottom of it."
