Lenihan accused of failure over banks

MINISTER FOR Finance Brian Lenihan has been accused of failing to live up to a commitment to introduce legislation to crack down on “crony capitalism” and to ban cross directorships.

Labour leader Eamon Gilmore told the Dáil that Mr Lenihan in an interview in the Financial Timeson March 17th had said that Ireland was "planning to introduce tough legislation to clamp down on crony capitalism and excess bank lending in the wake of the property bubble. He said the measures would include a ban on cross-directorships and on chief executives becoming chairmen, as well as creating a Central Bank commission. Eight months later, there is no sign of the legislation."

Not only that, he added: “The Government appears to have changed its mind on the measure because this week it has approved the chairman and chief executive being the function of one person in one of our largest banks.”

He asked Tánaiste Mary Coughlan: “What has happened to this legislation that was going to put an end to crony capitalism? Is cronyism alive and well again both in Government and for its associates in the business world?”

But Ms Coughlan pointed out that the promised legislation was of “huge consequence” and “concerns the Central Bank and the Financial Regulator”.

It was being worked on and would be published early in the new year.

Alan Shatter (FG, Dublin South) also criticised the failure to produce promised legislation to address regulatory issues.

Mr Shatter said that “this country has been destroyed by lax regulation” and “in other countries, including the United States, substantial regulatory measures have been put in place. When will we see the new regulatory legislation? What is the reason for the delay” on legislation that should be given priority.

He also asked if the Tánaiste agreed with the view expressed by the governor of the Central Bank that salaries of bank executives “should not be capped” and was that the reason “the Government made a hames of the AIB issue”.

Ms Coughlan said that discussions were ongoing between the Department of Enterprise and the Department of Finance as to which one would be responsible for the legislation.