Anglo-Irish External Auditors fail to appear before Oireachtas Committee

February 3, 2009


An Oireachtas committee chairman has criticised the failure of Anglo Irish Bank’s external auditors to appear before the committee. Last night Ernst & Young said it would not be appropriate to appear because the secret loans to directors issue is still under investigation.

Economic Regulatory Affairs Committee Chairman Michael Moynihan said the secret loans at Anglo Irish Bank had destroyed faith in the financial system. He said he was extremely disappointed external auditors had refused to appear before the committee.

Ernst & Young said it received legal advice that it would not be appropriate to appear before the committee. It said on the basis of information it received from Anglo’s management it believed its audit had been up to scratch. The internal auditors have decided they will appear before the committee today.


Business as Usual – Capital Programme to Proceed, No substantial changes to Tax Base

January 30, 2009


Taoiseach Brian Cowen has stated the introduction of a proposed property tax is “speculation” and a decision will be made by the Cabinet “in due course”.

Speaking at the Davos global economic summit in Switzerland, Mr Cowen said the issue would be considered by the Commission on Taxation which is due to report on taxation in September ahead of the December Budget.

Our discussions are ongoing on that but I think we have the Commission on Taxation report which is due mid-year – mid to autumn – to be ready for consideration in our Budget proposals from next year on,” Mr Cowen told reporters.

The Central Bank yesterday advised the Government to consider a tax on residential property.

The assistant director of the bank, Tom O’Connell, said yesterday at the launch of the bank’s first bulletin of the year that a residential property tax should be one of the options considered. Mr O’Connell said a €1,000 annual tax on the 1.7 million dwellings in the State would yield €1.7 billion per year.

However, the Irish Congress of Trade Unions (Ictu) made clear that it is not in favour of the introduction of a property tax on all homes, rather on investment properties and “trophy homes” only.

The Taoiseach went on to state that there were:  “various views about how soon this recession might end and how prolonged it would be depending on how optimistic or pessimistic people are about it.

“There is no doubt that 2009 is going to be a very difficult year and next year for some will see a return of some growth. For us we will have to face into 2010 with the same determination that we face into this year.”

It is clear from what we have seen in the last six months, from the downturn in economic activity, that we have to bridge the gap that has now arisen both in terms of expenditure cuts and taxation. It cannot be met by expenditure cuts alone, although they are an important factor in addressing the situation.

Broadening the (tax) base and seeing what way we can build up our taxation base and at the same time stay competitive, do all we can for creating and maintaining jobs – that is the trick, that is the balance and judgement that can only be made closer to budget time.”

Talks on an economic recovery plan involving the Government, unions and employers continued today. Ictu general secretary, David Begg, last night said unions would have to be able to show “some progress immediately” in relation to tax as part of the social partners’ talks with the Government.

Minister for Finance Brian Lenihan told the Dáil yesterday that a broadening of the tax base is on the agenda but he defended the current income tax system as fair and progressive. Mr. Lenihan reaffirmed the Government’s commitment to the 12.5 per cent rate of corporation tax.

In a speech at Davos yesterday, the Taoiseach stated that Ireland’s capital programme was the largest in Europe. The Taoiseach went on to state the following: 

“We consistently pursue a pro-business and pro-employment tax regime;
we maintain a fit-for-purpose business regulation environment that recognises the need for control and certainty whilst avoiding unnecessary bureaucracy;
We remain committed to very substantial investment in key areas such as infrastructure, education and, critically, R&D, innovation and commercialisation.”

Comment: More of the Same –

It is quite clear from these collective statements from the Taoiseach, the Minister for Finance and ICTU that there are to be no substantial changes in the tax system. I

It is also clear from the Taoiseach’s speech at Davos, that substantial cuts in expenditure, are to be expected, and that state services such as Health and Welfare, and not the capital programme will be axed.


Bank Guarantee Order Signed by Minister for Finance

October 28, 2008

On Friday, 24th October 2008 The Minister for Finance Brian Lenihan has signed an order confirming the six main Irish owned banks will be covered by the State’s deposit guarantee scheme.

Irish Banks: AIB, Anglo Irish Bank, Bank of Ireland, EBS Building Society, Irish Life & Permanentand Irish Nationwide are the banks designated by Minister for Finance for inclusion in this arrangement. Outside banks: Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and Postbank will be included in the guarantee.

Under the terms of the arrangement, if any institution defaults, the Minister for Finance ‘will pay to the relevant creditor, on demand, an amount equal to the unpaid covered liabilities’.

The institutions concerned will pay a quarterly charge to the Exchequer in return for the guarantee. The scheme will last until September 2010.

Minister Lenihan stated that the conditions accompanying the guarantee under the Scheme ‘will ensure that balance sheet growth is measured and in accordance with prudent banking practice, that risk is properly measured and managed and the interest of taxpayers are safeguarded’.

The Minister went on to say he expects to make further orders shortly for the other banks eligible to avail of the Scheme.

A growing list of countries have been affected by the global financial crisis. These include: Iceland, Hungary, Pakistan, Ukraine, Serbia and Belarus which are all in discussions with the International Monetary Fund (IMF). Capital has also flowed out of countries such as South Africa, South Korea and Argentina which yesterday announced it was nationalising its pension funds.


Government to Extend Deposit / Debt Guarantee to Foreign Banks

October 9, 2008

The Government’s guarantee scheme is to be extended to four foreign-owned banking groups with “significant” operations in the State, the Minister for Finance Brian Lenihan said today.

In a statement the Minister said Ulster Bank and First Active; Bank of Scotland and its retail banking arm Halifax; IIB Bank and Postbank are eligible for the scheme.

Lenihan stated that the legislative details of how the scheme will operate were in the “advanced stages of drafting” and would come before the Dáil “as quickly as possible”. “Clearly, there will be some additional limitations and safeguards in relation to these operations to ensure that the support provided relates to liabilities arising from their position within the national economy, rather than to their wider group”.

 Mr Lenihan further stated that the Government would continue to “protect the security and stability of its financial system and is convinced of the determination of our partners to do the same.”



David Labanyi,

Irish Times, 9th October 2008