Mr Ray MacSharry lobbied the Minister for Finance on behalf of the Central Bank in the debate over whether it should be stripped of its regulatory powers.
It is almost unknown for a state institution such as the Central Bank to use consultants to lobby the Government. Mr MacSharry did so at the request of Mr Roy Donovan, a member of the board of the bank and former Fianna Fail fundraiser. A one-time finance minister and European Commissioner, Mr MacSharry is still active in Fianna Fail. He is also a director of several companies, including Bank of Ireland and Eircom.
His and Mr Donovan's efforts were in addition to the Bank's own lobbying, which took the form of a formal response to the Minister for Finance on the report of the advisory group set up to look at creating a single regulatory authority. Mr MacSharry, acting through his firm Beltra Consultants, asked the Minister to examine concerns about the report that had been raised by Mr Donovan and "to let him know the position".
Mr McCreevy, in turn, promised to bear the points made by Mr Donovan "in mind in my deliberations". A spokesman for the Bank said yesterday that the board, including the governor, Mr Maurice O'Connell, was not aware that Mr Donovan had taken it upon himself to approach the Government via Mr MacSharry. "No decision was taken by the board to organise lobbying," said the spokesman.
He said the Bank was not aware of the contents of Mr Donovan's letter but would be surprised if they were at variance with the Bank's stated views. The Bank has described the report of the advisory group, chaired by Mr Michael McDowell SC, who subsequently became Attorney General, as based on a "deeply flawed argument concerning accountability" and representing a "high-risk strategy".
The report calls for the establishment of a new single regulatory authority independent of the Central Bank and has the backing of the Tanaiste, Ms Harney.
The Minister for Finance opposes any significant watering down of the Bank's power and the Government remains deadlocked on the issue. Mr MacSharry refused to discuss his activities on Mr Donovan's behalf yesterday. He referred all questions to the businessman, who is out of the country.
Mr Donovan was appointed to the board of the Bank in December 1989. He is a former managing partner of Lisney and Son, the estate agents. He was heavily involved in Fianna Fail and was a member of the party`s fundraising committee when Mr Charles Haughey became leader in 1979.
According to documents released under the Freedom of Information Act, Mr MacSharry made representations to Mr McCreevy in June last year on behalf of Mr Donovan.
They included a letter from Mr Donovan outlining his response to the report of the advisory group. "Mr MacSharry has now asked the Minister to have the matter examined and to let him know the position," according to a departmental memo. The Minister wrote back to Mr MacSharry twice. In the second letter, Mr McCreevy said: "I will bear the points raised by the board [of the Central Bank] and Mr Donovan in mind in my deliberations on the report prior to its submission to Government." The Department has refused to release the original letters from Mr Donovan and Mr MacSharry on the basis that no final decision has been taken about the single regulatory authority.
It is over a year since the report of the advisory committee was published and the Minister for Finance and the Tanaiste still have to bring forward their joint proposals.
