Banking inquiry expected to be set up

THE GOVERNMENT last night gave its first firm indication that it is willing to establish a public inquiry this year into the circumstances that led to the banking crisis.

The banking situation, and the Nama strategy to rescue the main financial institutions, dominated yesterday’s marathon meeting of the Cabinet, which lasted 7½ hours, from 10am to 5.30pm.

But in a departure from the consistent line of Ministers for the past month, a short statement released by the Government after the meeting referred to the “obvious need” to learn lessons from the events that led to current problems.

The statement said, in full: “The Government today discussed a range of issues in relation to the imperative of restoring a properly functioning banking system, including the obvious need to learn lessons from the events that led to current problems.

“The Minister for Finance will bring forward a framework to next week’s Government meeting in the light of today’s discussion to address these issues. The Government will make clear in Dáil Éireann its position on the appropriate approach to be taken to inquiring into the origins of the banking crisis in that context.”

The references in the statement were being received last night as a strong signal that the Cabinet is now considering an early inquiry.

The Opposition parties also portrayed it as a sign that senior Ministers have yielded to their concerted campaigns to force such an inquiry.

In recent weeks, Taoiseach Brian Cowen, Minister for Finance Brian Lenihan and other Fianna Fáil Ministers have repeatedly said that an inquiry is not the first priority for the Government.

Mr Cowen has said that the matter would be given careful consideration but only after stability had been restored to the banking system. To date, he has also been non-committal about the timing of any such move.

Minister for the Environment John Gormley has been the only Cabinet member to speak publicly in favour of an early inquiry.

Last night, the Government spokesman said no details of its approach would be disclosed until next week’s Dáil statement. No information will be made available until then, he said, on the form, scope and the timing of the inquiry.

The ongoing investigations into Anglo Irish Bank by the Garda Síochána and the Director of Corporate Enforcement “will have to be taken into consideration”, said the spokesman.

According to informed sources, it is unlikely that an inquiry will begin until the end of the first quarter of 2010, by which time Nama will have completed a sufficient sample of valuations of assets from each financial institution and the Department of Finance will be in a position to know the level of recapitalisation that will be required.

The development came shortly after the Labour Party published a Bill yesterday that, if passed, would give specific powers to the Oireachtas to conduct full inquiries by parliamentary committee.

The Bill, drafted by the party’s justice spokesman Pat Rabbitte, was launched by leader Eamon Gilmore and deputy leader Joan Burton in Dublin yesterday.

Mr Rabbitte said that there was a general belief abroad, facilitated by Government, that parliamentary inquiries of this nature had been made obsolete by the Supreme Court judgment on the Abbeylara inquiry into the shooting dead of John Carthy by gardaí in 2000.

He said that was not the case. That judgment had held that an Oireachtas committee did not have powers to hold an inquiry that was capable of leading to adverse findings of fact against a third party, including a finding of unlawful killing.

Mr Rabbitte said that his Bill made it explicit that a parliamentary inquiry could not make a finding of criminal liability on the party of an individual.

He said it also addressed another defect – the explicit lack of authority until now of the Oireachtas to conduct inquiries of this sort.

“It highlights the need to restore an independent existence to parliament,” he said.