Banking Bill poses serious threat to press freedom

BUSINESS OPINION:New law will penalise journalists who report on Minister exercising powers in private

ONE OF the first pieces of legislation that the new Government will have to deal with is the banking resolution Bill, or to give it its full title the Central Bank and Credit Institutions (Resolution) Bill 2011.

The Bill will supersede the Credit Institutions (Stabilisation) Act, which was brought in last year to give the Minister for Finance exceptional powers to deal with the banks and implement the terms of the programme agreed with the EU and the International Monetary Fund.

It granted sweeping and arguably very necessary powers, such as the ability to go to the courts and get an order directing the banks to take particular actions – such as transferring assets – or the appointment of special managers to run them.

But it also contained provisions that allowed the Minister to exercise his powers in secret, or at least to seek to exercise them in secret.

Under the Act it is an offence to publish that the Minister has got a court order exercising his powers or that he is even thinking about making an order. Anyone who does could be fined up to €100,000 or face three years in jail. The Act also allows the Minister to have the application to the courts for the order heard in private.

These same draconian powers have been incorporated pretty much unaltered into the new Bill when it was published by the outgoing government. The main change is that these powers – and the other powers in the Bill – will now be delegated to the Central Bank, an organisation that is not known for openness and transparency.

More seriously, it is only indirectly accountable to the Oireachtas and is a satellite of the European Central Bank.

There was no meaningful debate around the inclusion of the secrecy provisions in the first Bill – which was rushed through the Dáil in something like five hours – and it would be potentially a very serious mistake were they to be included in the new legislation without any serious scrutiny. It is far from clear that such secrecy is really justified by the need for confidentiality when restructuring banks, as claimed by the government at the time. It argues that unauthorised disclosure of its intentions could trigger a run on deposits at a bank or provoke a move by creditors of a bank.

The weakness of this argument is that the outgoing government was very much a wounded animal. Its attempts to fix the banks had ended in ignominious failure with the request to the EU and the IMF for assistance. The preceding months had seen almost weekly revelations in the media of the “who knew what when” variety, none of which had been helpful to its cause.

It is not unreasonable to question whether this played a part in the decision to include what is in effect a gagging order on the media in respect of its banking policy in the Act. The prohibition of the reporting that a Minister is even considering making an order in respect of the one of the banks could be interpreted as exposing journalists – and their sources – to jail and a fine if they write anything that attempts to report on Government plans regarding the banks.

In fairness to the outgoing government, it should be noted that it has not used the Act in such a fashion or even intimated that it would. The powers available to the Minister have only been used on three occasions according to public knowledge.

The first occasion was to effectively nationalise AIB in the days before Christmas; the next was to tee up the sale of the Irish Nationwide and Anglo Irish deposits; and the final occasion was to effect the transfers.

This paper was excluded from the court on the first occasion. On the second two occasions, The Irish Times was represented in court and the government’s lawyers said it was the wish of the minister that applications should be heard in public as far as possible. What this has amounted to is a ban on reporting the proceedings or their outcome until after the markets have closed. The court has also ruled that commercially sensitive information could be redacted from affidavits.

The courts’ pragmatic approach does not negate the fact that the Credit Institutions Bill – and its proposed successor – remains a very dangerous piece of legislation from the standpoint of free speech and the role of the media in holding the Government to account.

Just because these powers have not been used to gag a journalist does not mean for one minute that they will not be used in this fashion in the future.