Dear Minister,

I refer to Monday's editorial in The Irish Times which contains a number of seriously inaccurate and misconceived statements relating to the Central Bank, including a reference to an apparent failure of the Bank to "inform the Minister . . . and through him the Dail that it had knowledge of (certain) banking practices . . ." In order to avoid any further misconception about the disclosure of information, I would like to set the record straight.

You wrote to me in October 1997 in relation to the findings of the McCracken tribunal requesting an examination of the McCracken report and a comment on the board's view of the adequacy of the supervisory and regulatory statutes and procedures and their implementation. This report covered the period January 1986 to December 1996.

As your letter asked that we specifically examine references to supervision in the McCracken report, we felt it would be helpful to reply at length on the supervisory issues which were referred to in the report and we did so under a waiver from Guinness & Mahon of the normal confidentiality requirements.

This allowed us to discuss fully the issues which arose in the McCracken report, namely breaches by G & M of our licensing and supervision requirements and standards relating to large liabilities to interbank depositors and to matters relating to the control and management of G & M.

In the reply I indicated that the system for operating the Ansbacher accounts referred to in the McCracken report was not known to the Central Bank. These accounts were not part of the G & M accounting system and could not, therefore, be detected by the supervisory process. The bank learnt of the existence of these accounts for the first time through the McCracken report.

The Moriarty tribunal was established in September 1997. The Central Bank has had frequent contacts with the tribunal in relation to both exchange control and supervisory matters. In consideration of the terms of reference, the bank made a submission to the tribunal in December 1997. This covered the period of the McCracken report.

In addition, it included a separate section on some issues arising prior to that period which were considered by the Bank to be relevant to the work of the tribunal. The material in this section related to matters which arose during the course of on-site inspections of G & M carried out by the bank in the 1970s.

The fact remains that the Central Bank had no knowledge of the system of numbered offshore deposit accounts known as the "Ansbacher deposits". These appear to have been deliberately concealed and were maintained outside the normal books and records of G & M.

The Central Bank's anxiety at all times throughout the various investigations of these matters has been to assist the relevant bodies established by the Oireachtas in every possibly way. To this end, evidence has been provided continuously, and up to the present moment, to the Moriarty tribunal, and the Bank expects to give further detailed evidence to the tribunal shortly.

As you are aware, Section 16 of the Central Bank Act, 1989, imposes strict requirements of secrecy in relation to supervisory matters. Within this constraint, we have ensured that all relevant information has been brought forward.

Please contact me if you require any further information. Yours sincerely, Maurice O'Connell.