Hospital loan files referred to tribunal

Files relating to an Allied Irish Banks loan to Beaumont Hospital have been referred to the Moriarty tribunal, which is investigating the financial affairs of Mr Charles Haughey, who was Taoiseach at the time. The Minister for Health, Mr Cowen, said the £7 million loan was raised in 1981 and used solely for the new hospital project. He added that, in view of the tribunal's terms of reference, he had asked the Attorney General to review the files to establish if, in his view, they revealed anything to warrant that they be sent there.

"He has now indicated that while the files reveal nothing to warrant that they be sent to the tribunal, it would be prudent to do so, particularly in the light of the request from the tribunal to provide any relevant records. Accordingly, the files relating to the loan have now been sent to the tribunal by my Department."

Mr Cowen said that the loan arrangements were sanctioned by the Department of Finance in February, 1981. In accordance with the provisions of the Beaumont Hospital Board (Establishment) Order (1977) consent to raising the loan was given to the hospital by the minister for health in March 1981. "The loan was approved by AIB to the Beaumont Hospital board at triple A rates, repayable over a five-year period. No approaches were made to other lending agencies. The hospital's capital account was held by AIB." Ms Theresa Ahearn (FG, Tipperary South) asked why the loan was referred to the AG. She added that the loan was raised a short period after a member of the Fianna Fail party had a very generous settlement with the AIB. "Would you not agree, even leaving that aside, that the loan was agreed at a very high interest rate? Why was there no tendering for the loan?"

Mr Cowen said the Moriarty tribunal had wide-ranging terms of reference. "I reject the suggestion by the deputy, for which she gives no basis, that these were high interest rates. "At that time in 1981, competition in the financial markets would have been less than today. The triple A rate, which was the rate for the most credit-worthy borrowers, was common to the main banks at that time." Ms Liz McManus (Labour, Wicklow) asked if it was abnormal practice for the Department to make a favourable deal with a bank without checking around to see what was the best value for money. Mr Cowen said there was no evidence of a favourable deal, adding that the House should talk about the facts rather than putting out a message.

"The facts are that in 1981 the triple A rate was the best available rate within the banking system." He added that the Department of Finance had not indicated to him that there was any required tendering process for loans relating to the matter. In that year, the Minister added, it was the practice to see how private funds could be accessed for the purpose of ensuring that public capital programmes went ahead. "The whole motivation for the Minister of the day was to ensure that Beaumont Hospital was completed." Obviously, said Mr Cowen, this was to the benefit of the hospital and to the running of the Department generally because it meant that the £40 million public capital programme of that year could be used for other purposes.