A MAJOR knowledge gap remains in relation to the events leading up to the night of the bank guarantee on September 29th, 2008, according to a report prepared by the Public Accounts Committee.
The report recommends that the PAC seek approval from the Government for an inquiry into the banking crisis. However, unless the Government accedes to the committee’s request to amend the law on cabinet confidentiality, which would probably necessitate a referendum, an inquiry on the lines proposed by the PAC would not be feasible.
The committee also requires authority from the Oireachtas to compel witnesses to attend and give evidence.
The report says that, as a result of legal restrictions on Oireachtas inquiries arising from the Abbeylara judgment, findings of fact and culpability should not be made but the causes of the banking collapse and the steps that should have been taken to prevent the crisis can be discussed.
It recommends an “inquire, record and report” model as the basic legal framework for the inquiry, saying that it would be less vulnerable to potential legal challenges than a model involving the making of findings. It says the reduced legal risks associated with this model would allow the inquiry to proceed efficiently and result in a more cost-effective inquiry.
The report says there is an urgent need for a parliamentary inquiry into the banking crisis as it has given rise to unprecedented costs for the State and its citizens. It points out that the bank recapitalisation alone has cost €64.1 billion, and an estimated €50 billion in shareholder value has been lost.
The report adds that, despite the various reviews and inquiries to date, there are still significant gaps in public knowledge requiring further scrutiny.
“Furthermore those who were in central roles before, during and after the crisis have not been called upon to explain publicly their decisions and actions.
“The legislative and policy responses to the crisis need to be critically examined and if necessary further measures put in place. As the sole body charged by the Constitution with legislative powers, the Oireachtas has a duty to ensure the legislative framework regulating the financial sector is sufficiently robust.”
It adds that the PAC inquiry should follow a logical sequence, and it identifies three separate pillars for the inquiry:
“The bank guarantee. A significant number of questions remain to be urgently answered regarding the available policy options and decision-making processes used during the period of weeks around the guarantee. As outlined above, the direct cost to the State of the banking crisis is now estimated to be €61.4 billion. There is also a need to examine the policy and legislative responses arising from the guarantee.
“The role of the banks. A major element of responsibility for the crisis lies with the banks. A significant number of outstanding questions remain on a diverse range of issues. In addition there is a need to examine how external auditors performed their functions as this role did not feature heavily in the reports published to date.
“The role and effectiveness of State institutions. This has received the most attention in the reports published to date and a number of reforms have taken place on foot of these findings. Questions remain to be answered as to the effectiveness of these reforms especially with regard to future capacity.
“The committee is of the view that the essential starting point of any inquiry into the crisis is an examination of the bank guarantee its origins and effects. The committee therefore recommends that work urgently commence on the first pillar of inquiry identified above.”
More than 270 questions are detailed in the report.
