Lenihan promises review of bank executive salaries

SALARIES, BONUSES and incentivisation schemes for bank executives will be carefully reviewed to ensure that abuses in remuneration will not occur again, Minister for Finance Brian Lenihan has insisted.

Sinn Féin economy spokesman Arthur Morgan said that anyone in Anglo Irish Bank who had “self-incriminating evidence and had five months to clear it would be very foolish to be caught” following yesterday’s raid on the bank by the fraud squad. Mr Lenihan said the Government was prepared “to look at and examine proposals such as an export insurance scheme, the creation of a bad bank or other more innovative Irish solutions” to deal with the problems in the banking sector.

He cautioned however that an export insurance scheme would require some form of up front commitment or deferred commitment of significant financial cost.

Mr Lenihan said the British government might announce such a scheme this week. “I am firmly of the belief that there is no huge benefit to being first out of the traps with a solution on this issue and the best approach is to learn from other experiences.”

The Minister also said: “We will fully investigate the loans to Seán FitzPatrick, the Seán Quinn share transaction and the Irish Life Permanent deposit arrangement.”

Mr Lenihan rejected a Fine Gael motion seeking the removal of all key members of the Financial Regulator, a cap of €250,000 to be imposed on banking executives and the naming of the 10 people in the so-called “golden circle” involved in the €451 million transaction to purchase shares in Anglo Irish.

He said it was “clear that the salaries of many executives are way out of line with the salaries of comparable executives in Irish companies of a similar size and scale”.

Reiterating his insistence that “there will be a new pay regime in the banking sector in Ireland”, he said the report of the committee chaired by Eddie Sullivan was due on March 5th and would include a recommendation to cap salaries.

Fine Gael finance spokesman Richard Bruton, who introduced the motion, said the fraud squad raid on Anglo Irish Bank yesterday “after months of inaction by the regulator only reinforces Fine Gael’s call for a clear-out of the Financial Regulator”.

He said it was extraordinary that the Government had knowledge of the share transactions involving the “golden circle” almost 12 months ago, yet the matter is only now being investigated.

It was equally extraordinary that the transactions between Irish Life Permanent and Anglo Irish, about which the Government had information in October, were only now being investigated.

If remarks by Minister for Transport Noel Dempsey of “economic treason” were to be taken seriously, “the Government will now take concrete action, otherwise their comments are just more rhetoric. The world is now looking to see what action Ireland will take.”

He said the Government “must insist that the banks provide a far more realistic estimate of their loan losses before any further form of State recapitalisaton”.

The appointment of the next governor of the Central Bank “must be opened up to international competition and scrutinised by the Dáil” and the Government must release the names of the 10 Anglo-Irish investors “and reveal how the Government and bank will recover the €300 million worth of debt on behalf of the taxpayer”.

Labour finance spokeswoman Joan Burton said: “This deal in Anglo Irish Bank in relation to this ‘toxic 10’, this deal was a serious misrepresentation and protestations of banker-client confidentiality simply do not arise in this context.” She said the Government was putting up a “straw defence” and that the Government and the previous Fianna Fáil government were “intimately connected in the affairs of this bank and yet you continue to withhold the names of the 10 from the Dáil and the people of Ireland who are about to be increasingly pauperised by the failures of your Government”.