The High Court is to review how the Government chose a nominee for the European Investment Bank vice-president. Whatever the outcome, should the nominee automatically get the job? Under the EIB's founding statute, proposing vice-presidents is an independent internal operational decision, while nominating directors is a political one for the EU states.
Turning vice-presidents into political appointments subverts this statute, which is part of the 1958 Treaty of Rome and cannot be changed without a referendum in Ireland.
Independence in decision-making is critical to a bank with political shareholders. So the statute creates a balanced decision-making chain, with the political world at one end and the banking world at the other.
1, The openly political EU states choose the bank's governors, and nominate its directors. They have no role in operational decisions.
2, The board of governors, being the EU finance ministers, can initiate strategic and monitoring decisions.
3, The board of directors begins the banking side of the decision chain. Though politically nominated, directors must act independently.
4, The management committee is the full-time president and vice-presidents. They prepare the decisions of the part-time directors. They must act independently and represent only the bank.
The bank's 1978 20-year report states: "The point that the directors act on proposals is significant because recommendations to make loans come up, on the judgment of the management committee, and are not handed down." This logic clearly applies for any decisions needing a proposal from the next most independent level. Such decisions must first be filtered through the judgment of the directors.
The directors should identify and consider a range of qualified candidates. Instead, on the surface, the formalities are met: the governments are merely nominating people for the directors to propose. But, in reality, the directors restrict themselves to proposing only the selected nominees of certain governments.
The Government says it is a political decision as, "There is no procedure for nomination of directors; it is done by international political agreement." But vice-presidents are not directors. They are management committee members. The board of directors "shall consist of 25 directors and 13 alternates" (Art. 11). These 38 do not include the president or vice-presidents.
The governors appoint both positions, but candidates' names should come from opposite directions. Twenty-four directors are nominated by EU states and one by the Commission. But vice-presidents should not emerge from a procedure "done by international political agreement". They must be appointed "on a proposal from the board of directors" (Art. 13) whose "independence and competence are beyond doubt.
On May 23rd, Mr McCreevy told the Dail: "For the coming four years, Mr O'Flaherty will be a vice-president, when his nomination is endorsed by the governors." Using the words will be and when subverts the bank's statutory decision-making duties and the Treaty of Rome.
Directors may not abdicate their duty to use their own discretion. And EIB directors must ensure the bank's statute is adhered to. So, however the Government selects a nominee, three key questions remain:
1, Will the EIB directors seek and consider other nominations, from banking or trade bodies, or by advertising the post publicly, before deciding whom to propose?
2, Will they put in place an open, accountable and non-political procedure that produces a balance of suitable vice-presidents from a range of EU States?
3, Will the EU states stop subverting the bank's statute by using the nomination procedure for directors to nominate the only candidates for vice-president?
I have written to the bank asking for the qualifications for this job, and how to apply or nominate someone suitable.
Michael Nugent is a writer and civil rights campaigner, and is a member of Fine Gael. The EIB's statute is online at www.eib.org/pub/statute/contents.htm