Mistake to meet at Druid’s Glen says former Cowen adviser

‘Morally indefensible’ to force taxpayers to bear costs Alan Gray tells banking inquiry

Former Central Bank director Alan Gray speaking to the banking inquiry. Photograph: Oireachtas TV

Former Central Bank director Alan Gray speaking to the banking inquiry. Photograph: Oireachtas TV


A former director of the Central Bank and former adviser to Brian Cowen said it was a mistake to meet the then taoiseach and former Anglo Irish Bank chairman Seán Fitzpatrick at Druid’s Glen for a golf outing in July 2008.

Mr Gray made the admission after a question from Fine Gael TD John Paul Phelan.

He said the event was organised by Fintan Drury, a former Anglo director, who he was in regular contact with.

Mr Gray said: “Nobody asked me to prepare an agenda for the meeting [before the game of golf]. I was invited to outline any views I had on employment, on what was happening in the economy which is something many governments have done over a different period.

“I put in a lot of effort in advance of that meeting talking to international experts.”

Mr Gray said he made detailed notes which became the shape and the agenda for the meeting.

He said banking was not discussed in any form whatsoever throughout the day.




Mr Gray has criticised the decision not to burn bondholders before the Dáil’s banking inquiry.

He told the committee he was reluctant to condemn international institutions.

However, he added: “I believe their decision to subsequently force Ireland to avoid imposing losses on bond holders and requiring Irish taxpayers to then bear the cost was morally indefensible.

“It was one of the worst examples of a small state being forced to socialise losses [ie for the taxpayers to pay the costs] while the private sector gains were protected. Ireland, Portugal, Spain and Greece and other countries have been paying the high costs ever since.”

Mr Gray, who was the only person Mr Cowen contacted on the night of the guarantee in September 2008, said the decision was not thought up on the night of September 29th.

He said it was formed from extensive analysis from the Central Bank and the Department of Finance.

Mr Gray told the committee: “This was the main option being considered at an Emergency Joint Central Bank Board Meeting on September 25th but it must have been worked on much earlier.

“The Governor of the Central Bank and Department of Finance briefed the board and indicated that a guarantee of the liabilities of banks was being considered.

“What is evident from the Emergency Central Bank Board minutes is that the proposal was to cover the six financial institutions. There was no suggestion at that time of any option to guarantee some banks but to nationalise others.

“I do not know where or when this revised option emerged but it may have come late in the day and possibly sometime after the September 25th, 2008. The Central Bank Board was never asked for a view on this revised option.”

Mr Gray said the European Central Bank did not grasp the seriousness of the situation and refused to take responsibility for their role.

He said it was his opinion the blanket bank guarantee that was agreed by government was the “least worst option” available.

In his written statement, Mr Gray outlined the events that lead to him playing golf with Mr Cowen, Mr Fitzpatrick and Mr Drury at Druid’s Glen.

He said he joined the group for the early meeting, did not play golf and joined them again for the dinner. Mr Gray said there was a wide and broad discussion on the economy at the event.

Night of the guarantee

Mr Gray also addressed what he and Mr Cowen spoke about on the night of the guarantee.

He said: “The critical necessity to only provide a very short time limited guarantee for the exceptional period of financial vulnerability in order to minimise any risk to the State was something I remember highlighting.

“This was necessary in my view to minimise any exposure to the State aid and was aligned with the limited time guarantee given by the UK government to Northern Rock which I was aware of. It was also necessary to ensure it met the fair remuneration of the guarantee criteria required by EU State Aid Rules and to enhance the chances of a positive market reaction.”

Mr Gray was visited by Mr Fitzpatrick and David Drumm on September 29th, 2008.

He said he did not invite the two men to his office and could not answer the question as to why they came.

The former Central Bank director said they told him Anglo was facing a major crisis and it would not open the next day.

Mr Gray said there has been “unfounded slur” made that he agreed to make a recommendation to the government based on that meeting.

He said: “I can state categorically that I never did nor would I ever do that.”