€15m fees paid to legal firm for banking crisis advice

 

FEES PAID by the State to the law firm Arthur Cox for advice on the banking crisis have risen to almost €15 million, according to new figures supplied by Minister for Finance Michael Noonan.

Mr Noonan said that the practice, which has given legal advice to the Government on the crisis since September 2008, was paid €1.3 million by the Department of Finance last year in addition to €1.6 million in 2008, €5.9 million in 2009 and €4.8 million in 2010.

The law firm was paid a further €1.25 million by the State’s National Pension Reserve Fund Commission for legal services relating to due diligence on Allied Irish Banks before the Government injected €3.5 billion into the bank through the fund.

The pension fund received €30 million in arrangement fees from AIB for the transaction.

Mr Noonan said the National Treasury Management Agency continued to pay professional fees to Arthur Cox incurred by the “shareholding management unit” of the NTMA’s banking unit after it was transferred to his department in August 2011 until the end of last year.

The new figures on the legal fees were disclosed in response to a parliamentary question tabled by Fianna Fáil’s finance spokesman Michael McGrath TD.

Last year Arthur Cox advised the Government on the use of the emergency banking legislation, the Credit Institutions (Stabilisation) Act 2010, to further recapitalise AIB and to inject €2.7 billion into Irish Life and Permanent, pushing it into State control.

The law firm was appointed at the direction of the Fianna Fáil-led government in September 2008 without holding a competitive tender on the basis that an emergency response was required.

The Department of Finance is not obliged to hold a competitive tender for a contract where the Government does not have the time due to “extreme urgency”. The firm subsequently won competitive tenders for State work on the crisis.

In the autumn the firm’s managing partner Padraig O’Riordan advised the then minister for finance Brian Lenihan on his negotiations on plans to recapitalise the banks and worked closely with department officials throughout that year.

The firm has been criticised for representing the State while at the same time providing legal services to Bank of Ireland, which has received €4.2 billion from the Government and in which the State has a 15 per cent shareholding.

Mr O’Riordan defended the firm in an interview last year saying that the legal practice had separate teams acting for Bank of Ireland and the State.