Billions of Irish people’s money was illegally given by the Minister for Finance via promissory notes to insolvent private banks without any vote or authorisation of the Dáil, a three judge High Court was told today.
It is a “bedrock of principle” of democracy in this State, founded on the Constitution, that the Government cannot dispense public money without a Dáil vote, John Rogers SC argued.
The Minister for Finance had issued promissory notes without any such vote and Section 6 of the Credit Institutions Financial Support Act 2008 providing for such notes to be issued without specifying either what amounts were involved or what time limits should apply to the notes was unconstitutional. Laws which allowed for those notes to be issued amounted to “a blank cheque”.
Mr Rogers was opening the challenge by United Left TD Joan Collins to the Government's promissory note payments as part of the € 31 billion recapitalisation of various banks.
Beginning his outline of the State’s arguments opposing the case, Michael McDowell SC said Ms Collins’s arguments were based on “a radical misunderstanding” of the Constitution.
It was “simply wrong” to argue it was not open to the Oireachtas to pass a law that does not pre-quantify or pre-clear amounts related to the State’s expenditure, he said. If there is a legislative power given to the Minister to charge or appropriate the Central Fund, that power was valid.
There was a “fundamental misunderstanding” by Ms Collins as to the relationship between the legislative and the budgetary process, he argued. The executive was accountable to the Dáil and could be dismissed if a majority of the Dáil decided so.
The issues of law raised in the case have been described by lawyers for both sides as of huge importance to the State and public as they relate to the basis of the State’s funding.
Ms Collins was in court today and the action is also being observed by senior officials of the Department of Finance, including Deputy Secretary General Ann Nolan.
An earlier challenge by businessman David Hall to the promissory note payments resulted in a High Court decision by Mr Justice Kearns earlier this year that Mr Hall did not have the necessary legal standing to bring the case.
He didn’t have the necessary standing as he was asserting a claim on behalf of TDs when he himself was not a TD and had not shown that any TD was willing to bring such a challenge. That ruling is subject to a Supreme Court appeal yet to be heard.
In her action, Ms Collins claims the promissory note payments, proposed as part of the € 31 billion recapitalisation announced by the Minister for Finance in 2010 of the former Anglo Irish Bank, Irish Nationwide and the Educational Building Society, are unlawful and unconstitutional.
She claims the promissory note payments are a profound attack on the democratic nature of the State because they amount to an appropriation of public monies not authorised, as required by the Constitution, by a vote of Dáil Eireann.
Securities issued under Section 17 of the Irish Bank Resolution Corporation Act 2013 to replace the promissory note issued in favour of IBRC following the special liquidation of that bank earlier this year are unlawful on the same basis, she also alleges.
She says Section 6 of the Credit Institutional Financial Support Act 2008, which states the Minister for Finance may provide financial support in respect of the borrowings, liabilities and obligations of any credit institution, is unlawful.
