An Oireachtas committee chairwoman has accused the Central Bank of Ireland of a “cop-out” over Israel’s “war bond” transfer to Luxembourg, after the bank gave its blessing for the switch to EU regulators.
Sinn Féin TD Mairéad Farrell, chairwoman of the Oireachtas finance committee, said the bank had sweeping discretionary powers to refuse Israel’s move but didn’t when notifying the change to the European Securities and Markets Authority (ESMA) in Paris.
“The crux of it for me remains that this request should have been refused,” Ms Farrell said.
“Had the Central Bank refused this request or indeed refused to approve the prospectus it would have sent a strong signal to other EU central banks about the serious concern they have as to the genocide and these bonds being used to fund this.
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“This is what should have happened; instead we have a cop-out where the approval was simply moved to Luxembourg, which occurred at the sole discretion of the Irish Central Bank.”
Israel uses bonds formerly approved by Ireland to part-fund its military campaign in the Gaza Strip. The country rejects claims it is committing genocide in Gaza.
The war has led to tens of thousands of deaths and a United Nations declaration of famine in the crowded Palestinian enclave.
Anger about the war prompted sustained criticism of the bank for approving Israel’s bond prospectus in the EU.
The arrangements changed last week when bank governor Gabriel Makhlouf told Ms Farrell the power to approve Israel’s bonds had transferred to Luxembourg. The switch, on the same day Irish approval for a 2024 bond expired, followed an Israeli request.
The Central Bank bank always insisted it was legally obliged to approve Israel’s bond document once it contained all necessary information required under EU law.
However, the Irish bank has wide discretionary powers over requests to transfer the right of approval for a bond prospectus to another EU member state.
The bank has the right “in its sole and absolute discretion” to accept or reject such requests. It must also consider each request on a case-by-case basis. The factors to be taken into account can include the domicile of the debt issuer.
The Central Bank notified the Luxembourg transfer to the Esma, the supervisor of financial markets, as it was required to do under EU regulations.
But it did not tell the committee directly that the critical notification had been made. A letter from Mr Makhlouf to Ms Farrell cited the regulation in question but not the Esma notification.
Ms Farrell accused the bank of a lack of transparency.
Asked for its response to her criticism, the bank’s spokeswoman said: “We don’t have any comment to make.”
Both the Central Bank and Esma declined to release notification papers. “I can confirm that in line with requirements, written notification was provided to Esma. We cannot publish this notification due to our professional secrecy obligations,” the bank said.
The move could not have gone ahead without the blessing of the Central Bank.
Citing the same “professional secrecy obligations” when asked the rationale for approving the transfer, the Central Bank said it could not comment on individual supervisory engagements.
Asked about the transfer from Ireland to Luxembourg, Esma said: “We can confirm that, in line with Article 20(8) of the Prospectus Regulation, Esma received a notification on the ‘Transfer of Approval pursuant to Article 20(8)’ from the home member state.”
The official Central Bank of Ireland guidance note on Article 20(8) states: “The Central Bank may accept or reject, in its sole and absolute discretion, any such request for transfer received.”
