The Government’s decision to establish a commission of investigation into IBRC transactions, including Denis O’Brien’s Siteserv deal, is a clear attempt to defuse a potentially damaging controversy that just won’t go away.

By finally bowing to persistent Opposition demands for precisely such an inquiry the Coalition is hoping to take the issue out of the political arena and kick it down the road.

The Coalition has been struggling for weeks to come to terms with an issue that straddles the intersection of business and politics and is all the more difficult to deal with because of that.

Past links between businessman Denis O’Brien and senior Fine Gael figures made it a tricky political issue for the Government from the start.

The first phase of the controversy centred on the circumstances surrounding Mr O’Brien’s acquisition of the bankrupt company Siteserv and the low interest rate that allegedly applied to his loans from the former Anglo Irish Bank, subsequently called IBRC.

Mr O’Brien’s decision to go to the courts seeking to prevent RTÉ broadcasting a programme revealing details of his banking arrangements ensured that the controversy kept bubbling away.

What escalated it to a new level was his attempt last week to try to prevent the media reporting a Dáil speech by Independent TD Catherine Murphy. The challenge to the constitutional right of the media to absolute privilege in reporting the proceedings of the Dáil dominated the headlines for the past number of days and put the Government under pressure to take a stand on the issue even though it was up to the media in the first instance to defend its rights.

Political damage

The Cabinet decision yesterday to agree to a commission of investigation headed by a retired judge was clearly a response to the scale of the controversy and the fear that it could do some serious political damage unless taken out of the political arena.

It had already become clear that the Government’s initial response back in April of asking the special liquidator of IBRC to conduct an inquiry into the Siteserv deal was totally inadequate.

Retired High Court judge Mr Justice Iarfhlaith O’Neill was subsequently appointed to monitor conflicts of interest in the IBRC transaction review, given KPMG’s previous role in advising on the Siteserv sale, but the Opposition demands for a commission of investigation intensified.

The Government continued to resist those demands and voted down a Fianna Fáil Private Member’s motion in the Dáil seeking such an inquiry. Fianna Fáil leader Micheál Martin demanded to know last night why, after repeated refusals to set up a commission of inquiry, Taoiseach Enda Kenny had changed his mind.

He asked: “Now, as the crisis grows and public confidence is shattered, the Government finally moves to do what they should have done on day one. The obvious question is: what has changed from the Government’s perspective to prompt this change of heart?”

Adams statement

Ironically, just as the Cabinet met at 3pm, Sinn Féin leader Gerry Adams issued a statement demanding a commission of investigation to establish what had occurred. He said he would be raising this demand with the Taoiseach when the Dáil resumed next week.

The likelihood of the issue dominating Dáil proceedings for weeks was one of the key reasons the Government decided to set up the commission, even if its stated reasons were somewhat different.

The inquiry proposal was brought to Cabinet by Minister for Finance Michael Noonan on the basis that new allegations had emerged in recent weeks in relation to IBRC, including the circumstances of the sale of Siteserv.

Those allegations centre on the claims made in the Dáil by Ms Murphy about Mr O’Brien’s banking arrangements which have been strenuously disputed by both Mr O’Brien and former IBRC chairman Alan Dukes.

Mr Noonan said last night that one of the main reasons for the establishment of the inquiry was the level of public disquiet. “We can’t have a belief going around that there were actions that were improper and that the taxpayer lost out,” he said.

Reflecting the Government’s confidence that nothing improper took place, he added: “Let the chips fall where they may but there is no evidence of any wrongdoing, yet.”

The setting up of a commission should enable the facts to be established but the chances of it reporting by Christmas as the Government suggests are remote, given the experience of other inquiries.

In the meantime, the Coalition should have one controversy fewer to deal with, although another is sure to fill the vacuum.