THE DEPARTMENT of Finance approved the appointment of law firm Arthur Cox to advise on the banking crisis without holding a competitive tender, saying an emergency response was required given the circumstances.
The law firm was hired by the department last September to advise on the bank guarantee and the recapitalisation of the banks, and was retained again in January.
According to records released under the Freedom of Information Act, the department retained Arthur Cox as its legal adviser without holding a competitive tender, saying “speed of action was essential to the Government’s response to the financial sector difficulties and to the introduction of the bank guarantee”.
The department does not have to hold a competitive tender for a contract where the Government does not have the time due to “extreme urgency”.
Explaining why it did not seek to hold a competitive tender last January and chose instead to retain Arthur Cox, the department said: “Considering the extent of the potential liability of the State and the national public interest issues arising it was essential that the best advice was available to Government as a matter of urgency.”
Department official Jim O’Farrell, a senior officer who was not part of the procurement process and could sanction the appointment of the law firm, wrote to a colleague saying that EU Commission guidelines “recommend a competitive process”.
“But in view of the unforeseen circumstances here which obviously required an emergency resonse (sic), that would not have been feasible in this instance,” he said. “Accordinly (sic) I would see the arrangements as well defensible from a procurement aspect.”
Arthur Cox has been paid a total of €3.8 million by the department for the firm’s work on the State guarantee and recapitalisation schemes to prop up the banks.
Last week the law firm won a competitive tender to provide legal advice to the Government over the coming months on the establishment of the State’s “bad bank” Nama.
The firm was paid €1.628 million in 2008 for work carried out between September 24th and the end of the year. Internal department documents said it was “vital” that this sum was paid in 2008 without explaining why.
Arthur Cox has been paid a further €2.2 million so far this year.
An internal department memo states that Arthur Cox was chosen because of “its acknowledged expertise in the field of commercial law and because its size allows it to dedicate sufficient resources to the project to ensure that advice is provided in a timely manner”.
“The firm is sufficiently large to deal with potential conflicts of interest by the application of well-established ‘Chinese Wall’ structures,” said the department.
