Promissory note law could involve ‘limitless’ public monies

The Minister for Finance used powers under a 2008 "emergency" law to create a promissory note in 2010 which can be adjusted to allow for the payment of "possibly limitless" amounts of public monies, the High Court was told today.

John Rogers SC said the promissory note issued in favour of the Educational Building Society, under which €250 million was paid to the Society earlier this year, provides the Minister can adjust the sum to be paid either upwards or downwards and permits the creation of "very significant, possibly limitless" liabilities for the taxpayer.

The sums involved were certainly not predictable when the note was created in June 2010, he added.

Mr Rogers was continuing his arguments on behalf of United Left TD Joan Collins in the continuing hearing of her challenge to the making of promissory notes in 2010 in favour of Anglo Irish Bank, EBS and Irish Nationwide Building Society as part of the €31 billion capitalisation of those institutions.

Ms Collins argues the making of the notes, under the provisions of the Credit Institutions Financial Stabilisation Act 2008, which he said appeared to have been “emergency” legislation, was unlawful because it involved the Minister appropriating public monies for expenditure when, under the Constitution, such “appropriation” was solely a matter for the Dáil.

The State denies the claims and argues the TD’s case is based on a fundamental misunderstanding of the relevant constitutional provisions.

The court has heard, following the liquidation of Irish Bank Resolution Corporation (formerly Anglo) last February, that the €25 billion promissory note issued to that bank was exchanged for Government bonds due to mature after periods of between 25 and 40 years.

Mr Rogers argued today, given his side’s claim the promissory notes are illegal, those bonds cannot be valid.

Because the action raises important constitutional issues with implications for the entire basis of the State's funding, it is being heard by a three-judge court comprising Mr Justice Peter Kelly, Ms Justice Mary Finlay Geoghegan and Mr Justice Gerard Hogan.

The hearing continues.