POLITICAL REACTION:THE SECRET nature of the High Court hearing that sanctioned the transfer of €3.7 billion from the National Pension Reserve Fund to AIB was strongly criticised by Labour Party deputy leader and finance spokeswoman Joan Burton. "Secret court hearings are an anathema in a democratic society and I deplore the Minister's recourse to this device."
Fine Gael TD and deputy enterprise spokesman Kieran O’Donnell questioned the Minister’s reasons for the secret court hearing.
“Why was it done in this fashion . . . under the cloak of two days before Christmas,” when it had already been signalled that money would have to be put into AIB, he said.
It was “very much the style of this Government to announce things at the last minute with no time for digestion,” he added.
There were other questions about terms and conditions and how the exchequer would get a return on the investment, he said.
Banking policy used to mean that taxpayers were the last ones asked to put money into the banks – “now it appears we are the first”, he said.
Ms Burton said the episode reflected the “overweening powers” granted to the Minister for Finance in the Credit Institutions (Stabilisation) Act rushed through the Dáil last week and signed by the President on Tuesday.
“He has raided the pension reserve to provide the new funds for AIB. He has used the extraordinary clause in the new Act to secure High Court approval by means of a secret hearing, a most disturbing feature of the new law that will deny citizens the right to full disclosure of information on this transaction,” she said.
She added the Irish people had a right to be fully informed on the details of AIB’s financial position if public funds that were collected for one purpose were to be diverted for another purpose.
Ms Burton said that in effect a precious and valuable fund to which taxpayers had contributed for more than a decade was to be asset stripped for an entirely dubious investment with little prospect of a meaningful return.
“Today’s transfer of €3.7 billion from the pension reserve fund to AIB represents the last act of a disastrous year for the Government’s banking policy. This day last year the board of Nama was announced and the Minister was confidently claiming that he had sorted out the banks and that the €4 billion he was giving to Anglo Irish would be sufficient to save that bank from insolvency.
“Now one year on, all those confident ministerial claims have turned to ashes. Not a single element of his strategy has worked. The cost to Irish taxpayers has escalated enormously and his bank bailouts now leave a massive legacy of additional debt on the national exchequer, which will have to be serviced at huge cost in years to come,” she said.
Ms Burton said the transfer to AIB was just one of a number of similar actions that had taken place this week. Anglo Irish had been given a further €6.4 billion while Irish Nationwide received an additional €2.7 billion bringing the total to more than €34 billion.
The Labour Party advocated the temporary nationalisation of the main banks at an early stage in the bank crisis as an alternative to Nama. Ms Burton said that policy would have given the State some realistic chance of securing the future of the bank and protecting the taxpayer.
“Now the bank is to be nationalised as a stranded hulk under the worst possible circumstances, the complete antithesis of the policy we promoted last year. As with the Anglo Irish nationalisation in January 2009, today’s move leaves the exchequer heavily exposed to further losses and is a total indictment of the failure of the Government strategy since the ill-fated guarantee of September 2008,” she said.
Sinn Féin finance spokesman Pearse Doherty said the National Pension Reserve Fund should be used to stimulate Ireland’s economy and create jobs and not to bail out banks.
“When Sinn Féin proposed using the pension reserve fund to stimulate the economy we were told it couldn’t be done but now we see that the Government is only too willing to commit this money to the banks.”
Mr Doherty said this represented a further failure of the Government’s banking policy and AIB and Bank of Ireland should have been nationalised long ago.
“This money should be used to stimulate the Irish economy and create jobs rather than being used to bail out banks. If this had been done when we had suggested it many people would be having a much happier Christmas and would be facing the new year with much better prospects,” said Mr Doherty.