MINISTER FOR Finance Michael Noonan was told by his department’s officials last year that a €3.6 billion accounting error had only “recently” come to light despite a paper trail stretching back more than 12 months.
In a briefing note for the Minister, prepared on October 28th last, he was told the National Treasury Management Agency (NTMA) “have recently drawn to our attention” a double-count of money borrowed by the Housing Finance Agency.
However, internal documents show there were at least 20 emails between the National Treasury Management Agency and the Department of Finance’s general government section relating to the matter between August 23rd, 2010, and October 25th, 2011.
The issue centred on the fact that exchequer money being loaned by the NTMA to the Housing Finance Agency was being counted twice as debt and overstated the national debt.
The issue became public knowledge on November 1st last year, after the department issued a statement following inquiries by TV3 News.
On foot of the error, Ireland’s debt-to-GDP ratio at the end of 2010 was reduced from 94.9 per cent to 92.6 per cent.
Despite the volume of correspondence on the matter, the first clear acknowledgement of the error by the department came 14 months after the matter was first raised by the NTMA.
In the first email from the NTMA in August 2010, an official flagged the issue and sought guidance from the department on how it should be handled.
The official wrote: “I’m not sure how to classify this figure or if it is being adjusted for elsewhere in the GGD [general government debt] calculations. Perhaps we could discuss before I finalise my figures?”
There is no record of a response from the Department of Finance.
In a follow-up email on September 1st, the same official asked: “Did you make any progress with the HFA [Housing Finance Agency] query? I am going on leave on Friday and was hoping to finalise the return.”
Another NTMA email on September 4th states: “Once again, can you liaise on the treatment of the HFA placements?”
There was more correspondence about government debt and quarterly returns in December 2010 and March 2011, but there is no record of a response from the Department of Finance.
By June 2011, an email from the department to the NTMA sought information following two parliamentary questions about the national debt.
It is not clear from the correspondence whether the Housing Finance Agency borrowings were still being counted twice, but it is clear that a department official was aware of the problem.
Towards the end of October 2011, a department official acknowledged the issue to the National Treasury Management Agency.
The official stated: “It seems you were right about the double count of €3.5 billion in the debt. In fact it appears to me from . . . the CAG’s [Comptroller and Auditor General] annual report there is a double count.
“I haven’t talked to anyone her [sic] about it. We publish the Pre Budget Outlook on 4 November. It will probably be reflected there. Thanks for alerting me to the issue.”
A briefing note prepared for Mr Noonan on October 28th, 2011 – released to The Irish Timesunder the Freedom of Information Act – said an "urgent meeting" between the Department, the NTMA and CSO was being planned to ensure the calculations of government debt were "completely robust".
After the issue became public, Mr Noonan told the Oireachtas it was clear there had been a “systems failure” and that an external review of how such information was handled would be carried out to ensure it did not happen again.
