|As a Part 2 Inquiry, the Banking Inquiry had powers to legally direct persons, papers and records. The Inquiry used its powers of compellability to:
|The Joint Committee’s main rationale for using these powers was to give a measure of certainty in planning the investigation and the public hearings schedule. Compellability powers also safeguard the rights of participants and witnesses by requiring them to be given adequate notice and providing them with the opportunity to make submissions to the Joint Committee.
|The legal process of compelling documentation and witness attendance comprised of a Notice of Intention to issue a direction sent to the participant/witness with a 2 week timeframe to make a submission on the direction issued.
|The Joint Committee then considered the submission (if any) and issued a direction to the participant/witness. Generally the direction gave a further 2 weeks to produce the documentation or 4 weeks in the case of public hearing attendance.
|The Joint Committee directed 14 participants to produce specified documents by line of inquiry51. All requests were approved by the Joint Committee before issue and were based around compiling evidence to support the Key Lines of Inquiry of the Nexus Framework.
|During the submission stage, it was indicated that not all documents would be supplied by the Direction deadline and in many cases extensions to deadlines were requested and agreed.
|This resulted in 40,044 documents being supplied to the Inquiry.
|In some cases, a further direction was issued to compel additional documentation. In most cases when requesting further information not contemplated in the original direction a voluntary request for information was issued. A further 1,235 documents were obtained through voluntary requests made to the participants.
|Due to scheduling and timing constraints, NAMA was asked to provide documents on a voluntary basis. Over 100 documents were furnished by NAMA to the inquiry under this voluntary process.
|By the end of the investigation process, approximately 500,000 pages of documents had been reviewed by the Investigation Team. Documents considered relevant to the public hearings were incorporated into Core Document Books and are published in Volume 3 of this Report.
|The Joint Committee issued general guidelines in respect of the statutory exemptions which compelled persons may seek to rely on in respect of the direction when issued. There are a number of statutory exemptions under the 2013 Act, in particular under section 70 and section 71. These exemptions include:
|The Joint Committee also explained to witnesses that if a particular legal provision applied to part of a document only, it was permissible to redact the information falling within that provision.
|The Joint Committee requested all persons from whom documents were sought, who relied on a specific statutory or other legal basis to withhold documents, to give an account of the nature of the documents being withheld under a specific category, and an explanation of why the particular exemption being relied upon arose.
|The Joint Committee also informed participants that they were permitted to redact the following personal information:
|The Joint Committee had the power to direct a witness to attend before the Committee on a date and at a time and place to give evidence and to provide any document in their possession or control. It had the power to direct a witness to make a statement in writing on the matters on which the witness was required to give evidence.
|The Joint Committee also had the power to give any other directions where these were just and reasonable. This power was primarily used in the directions to ask witnesses to submit statements and documentation in a particular format, fill in the metadata sheet, and to keep within a maximum threshold on the word count.
|Four parties received a direction to attend before the Joint Committee and were excused by the Joint Committee following a Section 72 declaration by the DPP. They were John Bowe, William McAteer, Sean Fitzpatrick and Pat Whelan (all Anglo).
|The Joint Committee withdrew a Direction to attend from Denis Casey (ILP/PTSB) following correspondence from the DPP requesting the withdrawal. Peter Fitzpatrick (ILP/PTSB) received a Direction to produce a written statement and was excused by the Joint Committee following a Section 72 declaration by the DPP.
|Certain witnesses were issued with Notices of Intention to issue a Direction/Directions and were subsequently not proceeded with.
|In general, any person in the State, any Irish citizen outside the State, or any person in an Irish registered vessel or aircraft or on an Irish diplomatic mission outside the State may be compelled54 . The Joint Committee could not therefore direct persons residing outside the State and who did not hold an Irish passport. The Joint Committee could however direct all persons residing within the State regardless of their citizenship.
|Exceptions exist in certain circumstances for the President, an officer of the President, Judges, the Master of the High Court, the Attorney General, an officer of the Attorney General, the DPP, an officer of the DPP and persons entitled to diplomatic immunity55 . (see also paragraph 7.23).
|A number of witnesses appeared or provided witness statements on a voluntary basis.
|The Joint Committee welcomes that the Government and the Department of Finance agreed on a voluntary basis to waive their right to legal privilege over certain matters. This allowed certain witnesses, for example a former Attorney General, to be questioned on specific areas in public hearings that they otherwise could not have discussed.
|The Joint Committee acknowledges the significant workload undertaken and the volume of documentation provided by participants and witnesses in response to the Joint Committee’s directions.
|The Joint Committee also acknowledges that not all witness requests for accommodation, for example on date changes could be facilitated and yet there was full compliance with these directions, with one exception.
|There were some minor technical breaches in terms of the dates of submission or the discovery and delivery of further documentation after submission, primarily due to the tight deadlines given in the directions. There were also breaches of maximum word count requirements by a small number of witnesses, however the Joint Committee decided on balance and on a case by case basis to accept these as exceptions due to the evidentiary value of the content.
|Due to limited time and resources, the Joint Committee was not in a position to conduct a detailed compliance review of the documents provided by institutional participants to establish whether –
|A detailed compliance review would have been a lengthy and costly process, which would not have in any event guaranteed 100% assurance. Without such a review however, the Joint Committee is not in a position to make a full and definitive assessment on compliance with requests for documents. While this is not ideal, nevertheless the Joint Committee does not feel that a lack of documentation has prejudiced its ability to carry out this Inquiry effectively.
|The Joint Committee recommends that, where a Committee of Inquiry chooses to compel the production of documents, the Committee should ensure that it has sufficient time and resources to appropriately audit compliance with its directions.
|David Drumm57 was issued with a Direction to appear before the Joint Committee and produce a written statement on 11 June 2015. The Joint Committee directed him to appear before the Joint Committee on 29 July 2015 and compelled a written statement by 1 July. Mr Drumm’s written statement was received a week after the deadline in the direction.
|Mr Drumm indicated on 23 July 2015 that he could not attend the 29 July public hearing due to family and work commitments in the USA and requested that he give evidence by video link. The Joint Committee considered this request and obtained legal advice which recommended against hearing evidence by video link. The DPP also communicated with the Joint Committee in which it strongly argued against the Joint Committee considering hearing evidence by video link. Having considered the request, the advice and the DPP’s concerns, the Joint Committee made the decision to reject the request for a video link and thus decided to maintain the direction. It communicated this decision to Mr Drumm on 28 July.
|Following this, the Joint Committee considered whether it should accept and consider as evidence the written statement of Mr David Drumm and took legal advice on this issue. Subsequent to this consideration, the DPP intervened to say that the statement would prejudice criminal proceedings if published. The Joint Committee engaged with the DPP through correspondence to attempt to resolve the issue but in the end, in light of the views of the DPP, the Joint Committee made the decision not to publish the statement and to reject it as evidence.
|The Joint Committee is of the view that David Drumm should have complied with the direction of the Joint Committee to appear but does not believe that there are grounds for a finding of “relevant misbehaviour” under the Act. Such a finding must give an account of the prejudice caused to the inquiry as a result of the failure to co-operate. In the same way as the DPP intervened to prevent the publication of Mr. Drumm’s written statement, the DPP would almost inevitably have intervened to prevent Mr. Drumm’s appearance on the grounds of prejudice to criminal proceedings. Therefore in reality, no prejudice can be said to have been caused to the inquiry.
|Failure to comply with a direction to attend a public hearing where a witness’s expenses have been paid is a criminal offence under the Act58 . No offence is committed where expenses have not been advanced. The Houses of the Oireachtas Commission guidelines on payment of witness expenses provide for payment of expenses on a recoupment basis on application by the witness and do not provide for pre-payment. Thus the deterrent effect of an offence for failure to appear does not exist under present circumstances. That said, the Joint Committee notes that this issue had little practical effect on the Inquiry, as all witnesses apart from Mr Drumm complied fully with the obligation to appear.
|The Joint Committee recommends that the requirement for pre-payment of expenses for criminal sanctions to take effect should be removed. However inability to meet the cost of attending should be a defence to the charge.
|The Commission guidelines should also be amended to provide that witnesses may apply for pre-payment of expenses where they cannot meet the expenses of attending.
|Tom Browne59 was issued a direction on 11 June 2015 to appear on 24 July, with a written statement to be furnished to the Joint Committee by 26 June 2015. Mr Browne failed to furnish a statement within the deadline imposed by the direction. Following the passing of the deadline the Joint Committee issued two further separate items of correspondence asking for a statement to be supplied.
|No statement was furnished and the Joint Committee referred the failure to comply to the Gardaí on 15 July for further investigation and possible enforcement proceedings. Mr Browne did produce a statement on 20 July 2015. A second direction was issued to Mr Browne on 13 August and he appeared before the Joint Committee on 9 September.
|Jean-Claude Trichet, former ECB President60 , declined an invitation to appear before the inquiry. In this context, Patrick Honohan, Governor of the Central Bank agreed to liaise with the Joint Committee and in a letter dated 2 February 2015 to Mr Honohan, the Chairman suggested a series of options to be explored for engagement with the ECB.
|Jean-Claude Trichet subsequently agreed to respond to questions from Joint Committee members from the audience during an academic lecture as a guest of the Institute of International and European Affairs (IIEA) at the Royal Hospital Kilmainham on 30 April 2015. This was in a personal capacity and was not on behalf of the ECB.
|Through the IIEA, Mr Trichet furnished a copy of his lecture in advance and the Joint Committee shared their questions with him in advance. It was agreed that a transcript would be prepared of the event. The transcript was then admitted into evidence, uploaded to the website and was used by members in questioning other witnesses.
|The Joint Committee subsequently sought to follow up on its questions through the clarification process. In a letter to the Joint Committee dated 29 October 2015 Mr Trichet stated that the ECB, including its former office-holders, is precluded from appearing before national parliamentary inquiries and therefore it was not possible for him to participate in the Inquiry or provide a statement to the Joint Committee.
|The European Central Bank did not engage with the Inquiry. The Joint Committee acknowledges that there was no legal obligation for them to engage, nor could the Joint Committee compel them to do so. However the Joint Committee made significant efforts to engage constructively with the ECB in order to obtain relevant and material evidence while respecting that the ECB would have to voluntarily assist the Joint Committee.
|The Chairman of the Joint Committee first wrote to Mario Draghi, President of the ECB on 13 November 2014 as part of preliminary contact with all potential institutional participants in order to establish clear lines of communication in advance of the formal commencement of the inquiry some two weeks later. The standard letter was clear that it was not an indication that the Joint Committee would in fact call the addressee before the inquiry or seek documents from them. The letter requested that the ECB nominate a dedicated contact point for the Inquiry Secretariat for further liaison.
|Mario Draghi responded on 15 December 2014 that, as the ECB is primarily held to account by the European Parliament, the ECB did not see itself in a position to participate in inquires conducted by national parliaments and would therefore not appoint a dedicated contact person.
|The Chairman of the Joint Committee wrote again to Mario Draghi on 22 December 2014 asking the ECB to initially make available any documentation held by the ECB concerning events leading up to the Irish Government decision to introduce a Bank Guarantee on 30 November 2008, including minutes of meetings, notes, diary entries, transcripts, recordings and any other relevant documentation. The Chairman also asked for the opportunity to discuss how the ECB could assist the Inquiry while respecting its primary accountability to the European Parliament.
|Mario Draghi responded on 24 February 2015 reiterating that the ECB is primarily held to account by the European Parliament and hence does not participate in parliamentary inquiries on a national level. However he stated that the ECB could, in line with past practice, take part in an informal exchange of views on matters within the remit of the ECB’s mandate with the relevant committee(s) of the Irish Parliament and that Vitor Constancio, vice-President and longest-serving Member of the Executive Board, stood ready to represent the ECB in such an exchange of views. Mr Draghi requested that the Chairperson(s) of the relevant committee(s) be so advised. Finally, Mr Draghi confirmed that the records of the ECB did not contain any documentation concerning events leading up to the Irish Government decision to introduce a Bank Guarantee on 30 September 2008.
|The Chairman of the Joint Committee responded to Mario Draghi on 3 March 2015 stating that, while the Joint Committee was disappointed that the ECB would not participate in the Inquiry, the Joint Committee welcomed the offer to engage with the relevant Oireachtas Committees. The Chairman followed up in a further letter to Mario Draghi on 2 April 2015 advising that the Joint Committee on Finance, Public Expenditure and Reform was the relevant Joint Committee for the purpose of ECB engagement and stating that he had, accordingly, passed Mr Draghi’s letter of 24 February 2015 on to the Chairman of the Joint Committee on Finance, Public Expenditure and Reform.
|The Chairman of the Joint Committee on Finance, Public Expenditure and Reform wrote to Vitor Constancio, vice-President of the ECB, on 23 April 2015 inviting him to attend a meeting of the Joint Committee in July 2015 to discuss the ECB’s mandate in the context of Ireland’s Banking Crisis 2006-13.
|At this point (23 April 2015), the Joint Committee had a clear expectation that the ECB offer had been made in a general spirit of engagement with the Inquiry while respecting the ECB’s mandate. The Joint Committee expected that the offer to attend a meeting of the Joint Committee on Finance (which has significant membership overlap with the Inquiry Joint Committee) would serve to facilitate the giving of evidence to the Inquiry on the role of the ECB. This was in the context of the agreement of Jean-Claude Trichet to respond to Joint Committee members’ questions at the IIEA event on 30 April.
|However, the Joint Committee was taken aback when Vitor Constancio responded to the Chairman of the Joint Committee on Finance, Public Expenditure and Reform on 29 May 2015 stating that the ECB could not accept the invitation to attend a meeting of the Joint Committee as long as the Joint Committee of the Banking Inquiry would be collecting evidence and until it had delivered its final report. This was on the basis that “ recent developments ” strongly suggested that there was not the necessary clear separation between an exchange of views with the Finance Committee and the work of the Joint Committee of Inquiry.
|The letter concluded that accepting the invitation would imply discriminating against other national parliaments where the ECB has not participated in inquiries, and instanced examples to date where the President of the ECB had engaged with the national parliaments of Finland, France, Germany, Italy and Spain on an informal basis for an “ open exchange of views on the ECB’s monetary policy ” (see Figure 7.4 for details).
|The Joint Committee made one final attempt to engage with the ECB on 30 July 2015. On the Joint Committee’s authority, the investigation team contacted Mario Draghi by email “with a view to having a discussion with a nominated representative of the European Central Bank on the current situation regarding witness statements and evidence given at the Inquiry, which reference the Role and influence of the ECB”. The request was for a conference call or direct meeting with a representative of the ECB. The email concluded by stating that “The Joint Committee wish to facilitate the ECB in reviewing and responding to such statements or transcripts from public hearings”.
|The ECB responded on 10 August 2015: “As stated in the correspondence between the President of the ECB and the Chairman of the Joint Committee of Inquiry into the Banking Crisis, Mr Lynch TD, the ECB owes its parliamentary accountability to the European Parliament and hence is not in a position to participate in the proceedings of the Joint Committee. Therefore, I hope you will understand that the ECB cannot accommodate your request for a conference call related to statements or transcripts from this committee”.
|The Joint Committee notes that Mario Draghi agreed to take a limited number of questions from Irish MEPs in November 2015. The Joint Committee understands that this meeting was offered in the context of the Irish MEPs’ request for the ECB to engage with the Inquiry or with the relevant Oireachtas Joint Committee. While ECB engagement with the Irish MEPs is welcome, this engagement does not in any way substitute for the lack of engagement with the Banking Inquiry and could not in fact be used by the Inquiry, not least because it came at a point where the inquiry had concluded the evidence-taking phase of its work.
|The Joint Committee is strongly of the view that the ECB should have accepted the Joint Committee’s invitation to co-operate with the inquiry. The Joint Committee is disappointed at the lack of constructive engagement by the ECB with the Inquiry due to the materiality and relevance of the ECB’s role in the Irish Banking Crisis.
|It is the Joint Committee’s view that it should have been possible, with a co-operative mind-set, to reach agreement on appropriate modalities for engagement which would have met the needs of the Inquiry while respecting the mandate of the ECB.
|The Joint Committee considers that it is in the public interest to give details of its engagement with the ECB as part of its final report61 .
|The Joint Committee Clerk made contact with the OECD on behalf of the Joint Committee on 9 January 2015. The Joint Committee wished to hear from a representative of the OECD in public session as part of its Context Phase hearings.
|The OECD responded that it would not be in a position to send a representative to appear before the Inquiry on the basis that it had not been possible to secure the availability of the necessary senior staff. In its response the OECD directed the Joint Committee’s attention to the OECD’s views on the crisis as set out in the 2011 OECD Economic Survey of Ireland62 as well as the 2013 Economic Surveys of Ireland.
|As with the ECB, there was no legal obligation for the OECD to engage, nor could the Joint Committee compel them to do so.
|The Joint Committee considers that the responses of the ECB and the OECD, both of whom are germane to the subject matter of the Inquiry, stand in stark contrast with the European Commission and the IMF, both of whom co-operated fully and engaged constructively with the Inquiry on a voluntary basis.
|The Joint Committee wrote on 29 April 2015 to Merrill Lynch International, who were engaged as advisors to the Government in September 2008 on liquidity issues and strategic options in the context of the Irish banking crisis. The letter requested the appearance, on a voluntary basis, of a relevant representative at a public hearing in July 2015.
|Merrill Lynch International (MLI) responded on 13 May 2015 stating that, having considered the Joint Committee’s invitation and the proposed lines of inquiry, “we believe that these will be better answered in writing”. The rationale was that the advice provided to the Irish Government was the product of MLI rather than a specific team member and that providing collated responses would allow the Joint Committee to benefit from MLI’s “broader organisational knowledge…rather than the recollection of any one individual employee”.
|The Joint Committee acknowledges that it had no power to direct MLI to give oral evidence and also acknowledges that it did provide a written statement in response to questions.
|The Joint Committee recommends, as a general practice, that all contracts for expert advice services to Government should include a provision requiring the contractor to co-operate with parliamentary inquiries where requested.
|The Joint Committee wrote to Lloyds Banking Group plc on 18 December 2014 requesting them to provide certain documentation relating to Bank of Scotland (Ireland) Ltd to the Joint Committee and requesting them to nominate a contact person to liaise with the Inquiry Secretariat.
|Lloyds Banking Group plc responded on 26 January 2015 referring the Joint Committee to the April 2013 Report of the UK Parliamentary Commission on Banking Standards (PCBS): “An Accident waiting to happen: the Failure of HBOS”, which includes references to Ireland, a section on the international business, of which Bank of Scotland (Ireland) (BoSI) was a part, details of HBOS’ strategy in Ireland and Irish impairments.
|The letter also stated by way of background that BoSI had ceased to operate on 31 December 2010 and was dissolved in 2011. It further noted that the situation was complicated by (1) the broad scope of the Joint Committee’s request (spanning many years preceding the acquisition of HBOS by Lloyds TSB and the formation of Lloyds Banking Group – LBG - in 2009) and (2) the number of structural changes that had taken place within LBG following the acquisition of HBOS including those involving BoSI. These changes, along with the fact that relevant senior personnel were no longer employed by LBG, had a bearing on the sourcing of documents relevant to the Joint Committee’s request insofar as they related to BoSI.
|The Joint Committee responded on 4 February 2015 that the Joint Committee would review the UK Parliamentary Commission report for relevance to the Inquiry.
Chapter 7 Footnotes
51. Details of categories of documents compelled - see Appendix 6.
52. Total documents received from the listed participants include documents received under additional voluntary requests, where relevant.
53. The Central Bank Direction could only issue at this later date as primary legislation and Standing Orders had to be enacted to deal with the restrictions created by s.33AK of the Central Bank Act 1942 before the Direction could legally take effect.
54. See s.68(1)
55. See s.67(5), (6) and (7) and s.68(2) for Part 2 Inquiries. See s.67(8) and s.83(7) for further assistance in interpreting those subsections.
56. Merrill Lynch International (MLI) provided advice to the National Treasury Management Agency (NTMA). The MLI team consisted of approximately 17 individuals (the MLI Team) and a composite statement was provided.
57. Group CEO Anglo Irish Bank 2005 to 2008
58. Section 75(1)(a)
59. Anglo Irish Bank: Head of Wealth Management Division 2002-2005, Head of Lending Ireland 2005 -September 2007
60. ECB President from November 2003 to October 2011
61. See Appendix 7.
62. In particular, the Chapter “Overcoming the banking crisis”.