Banks may face Dirt-type inquiry into financial crisis

THE PUBLIC Accounts Committee is considering whether it will undertake a Dirt-style inquiry into the banking crisis.

Committee chairman John McGuinness said yesterday it was the intention of the committee to hold an inquiry, and it was entering consultation as to how it might proceed.

In the wake of public rejection of the amendment to the Constitution to enable the Houses of the Oireachtas to undertake full inquiries, the Public Accounts Committee was “best-placed” and the only committee with the powers to carry out such an inquiry, Mr McGuinness said at a hearing yesterday.

He said the committee would write to Minister for Public Expenditure and Reform Brendan Howlin about how the inquiry might proceed. Two options are under consideration by the committee.

The first would be to carry out an inquiry based on a report of the Comptroller and Auditor General, John Buckley, using information already available to him. This information would include informal minutes of the meetings of the Domestic Standing Group made up of representatives from the Central Bank, the Department of Finance and the Financial Regulator. The standing group met to exchange information relevant to financial stability and to develop a framework aimed at managing potential systemic crises in the run-up to the bank guarantee in September 2008.

The second option would be to provide legislation which would allow the committee similar powers to those granted to it in 1999 when it examined the Deposit Interest Retention Tax scandal. Legislation underlying the Dirt inquiry, which investigated the extensive use of bogus non-resident accounts for tax evasion purposes, included powers allowing the committee to compel witnesses to attend its hearings.

Legislation for a banking inquiry would also give powers to the Comptroller and Auditor General’s office to go into the banks and investigate through the use of an independent auditor.

Mr McGuinness said Mr Buckley had carried out some work already on an initial report and this could be available in a matter of weeks. It could then be examined by the committee or fed into the terms of reference of a wider inquiry.

The Dirt inquiry took 26 days and sat following the publication of the then comptroller and auditor general John Purcell’s report into the Dirt scandal.

He was given powers to hold the inquiry under the Examinations and Investigations under the Comptroller and Auditor General and Committees of the Houses of the Oireachtas (Special Provisions) Act 1998. This allowed him to carry out audits of bank and building society records through an independent auditor and to take evidence under oath.