Higgins wants 'ethical test' for investors in Irish banks

MINISTER FOR Finance Brian Lenihan is to remind financial institutions of their "social obligations" in the wake of calls for an "ethical test" to be applied to potential investors in the Irish banking sector.

Labour foreign affairs spokesman Michael D Higgins called for ethical obligations to apply to proposed investors, including the Carlyle Corporation, which he said "may have been involved in funding the production of cluster munitions". He warned that it "could be a case of taking assistance from the devil himself".

Mr Lenihan told him he had "social obligation" powers over the banks involved in the guarantee scheme.

During the Order of Business Mr Higgins pointed out that next week in Oslo Minister for Foreign Affairs Micheál Martin would sign a convention against cluster munitions on behalf of Ireland.

He added that "you can't be against them on Wednesday and then be looking for the people who fund their production on a Thursday".

The Galway West TD said the Carlyle Corporation "is one of the 10 biggest defence contractors and has an eminent board which has assisted it in procuring defence contracts". It was "appropriate for the Minister, perhaps, to publish ethical guidelines".

The "most important issue is that we have liquidity in the Irish banking system but it needs to be qualified by a social responsibility test and an ethical foreign policy test".

He asked: "Is it the intention of the Minister to address these issues in any consideration he might be making of the involvement of outside bankers in the Irish banking system?"

Mr Lenihan said "under the scheme, which is now in operation in relation to the guaranteed institutions, I of course do have powers to remind the financial institutions of their social obligations, and I will draw Deputy Higgins's comments to their attention".

Cluster bombs or munitions are large weapons that open in mid-air and scatter smaller weapons. They carry up to 200 small bombs, each the size of a soft drink can. In May this year in Dublin 107 states agreed to adopt the new convention which prohibits all use, stockpiling, production and transfer of cluster munitions. Legislation linked to the convention is currently before the Seanad.

On Tuesday night, during a Private Members' debate, Labour agriculture spokesman Seán Sherlock criticised the Carlyle Corporation.

Earlier yesterday Opposition finance spokespersons Richard Bruton and Joan Burton asked if the Minister planned legislation to allow the National Pension Reserve Fund invest funds if a consortium of Irish investors became involved in recapitalising Irish banks.

Mr Lenihan said no decision had been taken on legislation, and he welcomed "private investment in our banking institutions from whatever source". However, he added that "we must be assured that any such investment is in the public interest".

He reiterated that he had not ruled out co-investment by the State which was "not committed to any particular private investor".