Working in the Community, Working for the Community

Deputy Healy questions An Taoiseach with regard to Bank of Ireland, Wilber Ross and his associates blatantly ripping off the Irish public.

Deputy Seamus Healy: The Taoiseach’s and the Government’s ideological commitment to private banking has ripped off the taxpayer and the people. The value of Wilbur Ross’s and his North American vulture capitalist friends’ shares in Bank of Ireland has more than trebled, from €1.1 billion to €3.8 billion. They are now selling 6.75% of Bank of Ireland for €690 million, at a huge profit, while retaining 30%. I raised this issue during Leaders’ Questions on 7 November 2013 when I said:

In April 2013, on Bloomberg television, Wilbur Ross, the American vulture capitalist, described Bank of Ireland as his best investment anywhere in the world during the financial crisis. In July 2011 the Government sold State shares in Bank of Ireland to a consortium of North American vulture capitalists for €1.123 billion. The effect of the sale is that the State now owns 15% of Bank of Ireland’s shares at a net cost of €4 billion, while these vulture capitalists own 37% at a cost of €1.123 billion. The fire sale of Bank of Ireland shares has handed Wilbur Ross and his wealthy associates a capital gain of €2 billion. No wonder he was celebrating on television. They are onto a sure winner in the future.

This is all too true. Not alone had the people bailed out Bank of Ireland, the Government had guaranteed the shares would rise by designating Bank of Ireland a pillar bank. It made no sense. Now in the media Wilbur Ross is lavishing praise on Richie Boucher and the Government. Why would he not? With no risk, he and his partners trebled their investment.

Will the Taoiseach tell the people the truth? Will he tell them that while they were being fleeced in budget after budget, owing to the Taoiseach’s ideological commitment to the privatisation of banking, he has cost them €2.7 billion which has gone straight into the pockets of Wilbur Ross and his North American friends. If a person ran a sweet shop in the way Deputy Michael Noonan handles State investments, he or she would not be long in business. Will the Taoiseach sack the Minister for Finance who proposed this rip-off to the Cabinet – the rip-off of taxpayers and the people – in what was and is a fire sale?

The Taoiseach: The answer to that question is “No.” I was not sure whether the Deputy was going to propose that Anglo Irish should have been made a pillar bank, if one was to follow through on his dissertation. There are two things he should bear in mind. First, the fact that Mr. Ross invested in Bank of Ireland meant there was less of a capitalisation requirement for the taxpayer. Second, there will be no legacy debt attached. When the Minister for Finance brings his memo to the Government with a recommendation to dispose of the State’s element of ownership of Bank of Ireland, the taxpayer will make a profit. Therefore, the taxpayer was saved from further capitalisation of Bank of Ireland and when the Government decides to dispose of its shares, the taxpayer will make a profit. I am no fan of banks. As the Deputy is well aware, what has happened from the point of view of the Government is that it has put in place a set of targets and requirements for banks and the Central Bank: to offer every mortgage holder in distress a sustainable offer by the end of the year; establish the Personal Insolvency Agency; meet the requirement for SME lending; and provide the opportunity to open doors for greater access to credit in order that people can do business and create jobs.

The answer to the Deputy’s question is that the Minister for Finance will not be sacked; the taxpayer will make a profit on the disposal of the shares we own in Bank of Ireland.

Deputy Seamus Healy: I thank the Taoiseach for his response, but, once again, we have heard the usual smoke and mirrors blather. The fact is that the Government’s ideological commitment to private banking has gone even further. As bad as the Wilbur Ross affair was, the taxpayer has been ripped off again, as recently as December 2013. This happened when Bank of Ireland was unable to call or buy all of the preference shares held by the Government. On that occasion the Government voluntarily sold the excess shares to a third party at a knockdown price to facilitate the bank. The Government rushed deliberately to complete that sale before 31 March 2014, when those shares will be worth an additional €325 million. In addition, the whole operation meant the State’s share in the bank was reduced by another €100 million. The Government, therefore, lost €425 million in the deal. How can the Taoiseach continue to support a Minister for Finance who has stood over such a rotten and shameful deal for the taxpayer?

The Taoiseach: As I pointed out, we cannot have a functioning economy without functioning banks. When the Government was elected to office, we had a banking system which was completely dysfunctional, had gone off the rails and required radical restructuring. This happened with the putting in place of the pillar bank system.

The Deputy asked if the Minister for Finance would be sacked. The answer to that question is “No.”

(Speaker Continuing)

[The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny] We have a duty to the Irish taxpayer to see—–

Deputy Seamus Healy: The Taoiseach is standing over that.

The Taoiseach: —–that money paid into banks can be recovered to the greatest extent possible given the catastrophic economic mess left by those who went before us.

Deputy Seamus Healy: Shame.

The Taoiseach: In the case of Bank of Ireland the fact that Mr. Ross invested in the bank meant that the Irish taxpayer had to put less money into the bank than it might have had to do.

Deputy Seamus Healy: When did the Taoiseach sell shares for €425 million?

The Taoiseach: When the State, on the recommendation of the Minister for Finance, decides to dispose of its equity there the taxpayer will make a profit. That is our commitment, our duty and responsibility to the Irish taxpayers not to leave them at a loss, given the scale of what was inherited here.

Deputy Willie O’Dea: It was €3 billion less than the Taoiseach would have paid.

Link to Leader’s Questions 07 November 2013 as referenced today by Deputy Healy


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