THE DEPARTMENT of Finance and its agencies have spent at least €40 million in legal and consultancy fees in the past three years, according to new information from the department.
The Central Bank has spent more than €7 million for 15 reports and reviews carried out since 2008, an average of almost €500,000 per review.
In the same period, the National Treasury Management Agency (NTMA) paid separate consultancy firms €3.1 million for three reports and reviews, an average of €1 million for each. This is in addition to the €18.8 million the agency has paid to consultancy firms for legal and financial advice on the banking crisis.
The department paid €11.5 million for external advice during the same period in legal and financial fees.
The new information is contained in a reply by Minister for Finance Michael Noonan to a parliamentary question submitted by Fine Gael TD Joe McHugh.
The private firm that is the largest single beneficiary is the Dublin law firm Arthur Cox, which has received almost €15 million in legal fees from the department and the agency in the past three years.
The firm charged the department €1.6 million in 2008 and €4.14 million in 2009 for legal advice on the bank guarantee scheme, recapitalisation issues, nationalisation, Nama and the eligible liabilities guarantee scheme.
It billed the department €4.8 million in 2010 for “legal advice in respect of guarantees, nationalisation of Anglo Irish Bank, recapitalisations and restructuring plans”.
In addition, Arthur Cox was paid of €4.27 million by the NTMA for its work on due diligence on the National Pension Reserve Fund investment in Bank of Ireland and AIB preference shares; advice in relation to the drafting of the Nama Act; and advice on “legal issues arising in the performance of banking system functions”.
The NTMA refused to divulge the individual cost of the three reviews, costing a total of €3.1 million, completed in the past three years.
The agency cited commercial sensitivities. The first was a review carried out by consultants PwC in 2008 of technical and operational procedures in the prize bond scheme. The second, also carried out in 2009 and which does not specify the consulting group, was a review of fund investment performance. The final review by consultants Accenture examined NTMA’s corporate services in 2010.
For its part, the Central Bank also refused to supply details of the individual costs for the 15 reports and reviews it commissioned between 2008 and 2011.
The watchdog spent over €4 million in 2008 for eight reports on topics as diverse as consumer tracking research, a loan book analysis and assessment review, a review of trading controls and a financial capability study.
In 2009, the Central Bank commissioned three reviews from external bodies. One reviewed the issue of directors’ loans in the banks and building societies covered by the Government guarantee.
There was also a review of the business process in the banks as well as a review of the banking system pre-Nama, at the request of the Department of Finance.
In 2010, four reviews were commissioned at a cost of just over €2 million. There was a review of Nama’s asset valuation methodology; a strategic review of the credit union sector in Ireland; an examination of the organisational effectiveness of financial sector regulators; and a due diligence report.
Two other private companies were paid substantial fees by the NTMA. They were Merrill Lynch bank which received €7.33 million for its advice in the lead-up to and aftermath of the bank guarantee scheme, as well its advice in 2009 on investing National Pension Reserve Fund monies into banks.
Another bank, Rothschild, was paid €4.5 million to provide banking advice to the Minister for Finance under two separate contracts in 2009 and 2010.
A note to an earlier parliamentary reply indicates that the bank is due a further €2 million under the 2010 contract, bringing the total to €6.5 million.
