A Chathaoirligh,
I move this Bill.
As the members of this House are aware, this Bill is being brought forward today to give additional powers to the Commission of Investigation into Irish Bank Resolution Corporation. These provisions are necessary, given the nature of the investigation involved, to ensure that the Commission can effectively perform its functions. I am presenting this Bill today on behalf of the Tánaiste and Minister for Justice and Equality who has responsibility for the Commissions of Investigation Act 2004 under which the IBRC Commission of Investigation was established.
At the outset, I want to reiterate that the Government shares with the rest of this House a desire to ensure that there is an effective, efficient and timely investigation into the issues of significant public concern which have been raised in relation to IBRC.
This shared determination across the Oireachtas has underpinned the extensive consultation at all stages with the Opposition initially by the Minister for Finance, and subsequently by the Taoiseach.
Before I outline the provisions of the Bill, I would like to set out the background to this particular Commission of Investigation and also mention some of the issues raised in the determinations and interim reports of that Commission which have given rise to the provisions being considered today.
The Commission of Investigation into certain transactions conducted by Irish Bank Resolution Corporation was established in June 2015 following the approval of a draft Order by both Houses of the Oireachtas. The Commission is charged with investigating matters which are considered by the Government, and affirmed by the Houses, to be of significant public concern in respect of IBRC and to make any reports required under the Commissions of Investigation Act 2004 in relation to its investigation.
In accordance with its Terms of Reference, the Commission is required to investigate certain transactions, activities and management decisions which occurred at the IBRC between 21 January 2009 – being the date of the nationalisation of IBRC – and 7 February 2013 – being the date of the appointment of the Special Liquidators to IBRC – and which either: resulted in a capital loss to IBRC of at least €10 million during that period, whether by consequence of a single transaction or of a series of transactions relating to the same borrower or entities controlled by the same borrower; or are specifically identified by the commission as giving rise or likely to give rise to potential public concern, in respect of the ultimate returns to the taxpayer.
In November 2015, the Sole Member of the Commission submitted an Interim Report. That Report sets out in detail the substantial work undertaken by the Commission up to that point and the outcome of the interaction between the Commission and the Special Liquidators, the Department of Finance, the Directors of IBRC, the Central Bank of Ireland and the Irish Stock Exchange.
It is evident from those interactions, as detailed in the Report, that a number of significant issues arose in the course of the Commission’s work, in particular issues regarding the ability of the Commission to obtain and admit certain information and documents into evidence.
In light of those concerns, the Taoiseach engaged with the Leaders and representatives of the Opposition and, on behalf of the Taoiseach and the Tánaiste, I would like to thank those members for their observations and contributions during that consultation. On foot of those consultations, a legislative solution was proposed and it was agreed, again with members from the Opposition, to further consult with the Sole Member of the Commission in relation to the proposed legislative response. Following those consultations, the Taoiseach and the Opposition agreed on 2nd of June to proceed with the drafting of urgent legislation to address the matters raised by the Commission. This is the Bill before the House today.
As I have said, the first Interim Report of the Commission from November 2015 outlined a number of significant issues which had arisen in the course of the Commission’s work including:
· the Commission’s view that the issue of confidentiality precluded it from admitting certain documents into evidence;
· the Commission’s view that the issue of legal professional privilege precluded it from admitting certain documents into evidence;
· the Commission’s view that the duty of professional secrecy under section 118 of the Companies Act 1990 precluded it from receiving certain documents held by the Irish Stock Exchange;
· the need to address matters relating to potential conflicts of interest and the management of the workload of the Commission.
These are all issues which are now being addressed, to the greatest extent possible, in the Bill before the House today. As I have said, there has been close consultation with the Commission in the development of these provisions.
The approach adopted in this Bill is to introduce a bespoke piece of legislation which effectively applies the Commissions of Investigation Act 2004 with specific provisions relating to the IBRC Commission.
The Bill contains 9 sections. Of these, sections 2, 3, 4, 6 and 7 provide for additional powers to be assigned to the IBRC Commission of Investigation which were identified as lacking under the Commissions of Investigation Act 2004 and which consequently impeded the Commission in performing its functions under that Act. The investigation into the transactions and other acts undertaken by the IBRC during the specified period is of a nature which warrants these additional powers being given to the Commission. Therefore all of the provisions in this Bill provide for the IBRC Commission of Investigation solely and do not extend or in any way alter the application of the 2004 Act to other Commissions of Investigation, ongoing or otherwise.
Sections 5 and 8 of the Bill make provision to assist the management of the workload of the Commission and to ensure any potential conflicts of interest are avoided.
Turning to the individual sections.
Section 2 addresses certain powers of the Commission. Subsection (1) confirms that the Commission may make such orders and determinations, and give such directions, as is necessary for the performance of its functions and for that purpose the Commission shall have all such powers, rights and privileges as are vested in the High Court or a judge of that court. The need for such an amendment is set out in the Determinations published by the Commission – for instance sections 7.90 to 7.94 of Determination 1. Similar provision is also available to Tribunals of Inquiry under the Tribunals of Inquiry (Evidence) Act 1921 as amended.
One issue which arose during consultations and the drafting of the Bill is the extent to which this would draw this Commission closer to the Tribunals of Inquiry model. However, the Commission format remains distinct in terms of regular review and report back to Government.
Subsection (2) addresses the finding of the Commission of Investigation set out in its Determinations and in Chapter 6 of the first Interim Report to the effect that the Commission lacked the necessary statutory powers under the Commissions of Investigation Act 2004 to engage in a balancing of interests which may trigger the public interest exception to what is otherwise a duty of confidentiality. This arose as the relevant section of the 2004 Act – section 21 – expressly states that nothing in that Act shall compel any person to disclose information or documents over which a duty of confidentiality is asserted and found by the Commission to apply. Section 2(2) of this Bill therefore confirms that the Commission may admit documents in relation to which a duty of confidentiality is claimed.
Paragraph (b) of subsection (2) refers to article 27 of the EU Market Abuse Regulation. Article 27 provides for the non-disclosure, on grounds of professional secrecy, of information received pursuant to that Regulation. This would apply to information received by the Irish Stock Exchange and is similar to the obligation of professional secrecy under section 118 of the Companies Act 1990 and which is to be disapplied in respect of the disclosure of information by the Stock Exchange under section 7 of the Bill. The Sole Member of the Commission has confirmed that there may be circumstances where he may request information which may fall under the provisions of the EU Regulation. Again, I would like to reiterate that these provisions are introduced solely for the purpose of this investigation and the particular circumstances which have been identified by the Commission. Without the introduction of these provisions the Commission is clear that it’s ability to carry out its work would be severely limited.
A definition of ‘document’ is introduced in subsection (3) of section 2 so as to include tapes, discs and sound recordings as well as written material. Again, this is to ensure that the Commission has access to all information needed to effectively conduct the investigation.
Sections 3 and 4 of the Bill are introduced to ensure that the Commission may seek the directions of the High Court or refer any question of law to that court in relation to the performance of its functions. It is clear from the Determinations published by the Commission that the Commission had considered seeking the directions of the courts in respect of certain matters but that the 2004 Act does not provide any mechanism for a Commission to seek such directions. Sections 3 and 4 make the necessary provisions.
Section 5 is an important section and will address two concerns identified by the Commission. The first relates to the efficient management of the workload of the Commission. As the House is aware one aspect of the Terms of Reference for this Commission is the investigation of transactions during the relevant period which involved capital losses to IBRC of more than €10 million. As noted in the Interim Report, 38 such transactions have been identified by the Special Liquidators to IBRC. Effectively, this would involve up to 38 investigations. I understand that it has been agreed in consultation with the Opposition that the Terms of Reference for the Commission will be amended so as to adopt a modular approach to these investigations.
However, in light of the potential for a large number of investigations, the Commission has recommended, and it would certainly appear prudent, the appointment of additional members to the Commission. While the appointment of more than one member to the Commission is possible under the 2004 Act, that Act does not permit those members to operate in divisions or panels. Rather the members operate together as a single Commission. This section of the Bill proposes, therefore, that where an additional member or members are appointed to the Commission, they can operate in divisions and, importantly, the report and findings of any single division will be a report and finding of the Commission as a whole. While it is not intended to appoint an additional member at this stage, this recognises and responds to the range of transactions potentially to be investigated by this Commission. Permitting the Commission to sit in divisions will also mean that the concern identified by the Commission in its first interim report relating to a possible conflict of interest between a member of the Commission in relation to any particular transaction can be avoided by allowing that transaction to be investigated without the involvement of that member, should the need arise.
Section 6 of the Bill addresses the disclosure of information by the Special Liquidators to IBRC to the Commission of Investigation. Determination 1 of the Commission addresses the assertions of duty of confidentiality and legal professional privilege which have been asserted by the Special Liquidators and which the Commission has found to apply. The issues regarding the duty of confidentiality have been addressed through section 2 of this Bill in relation to which I have already spoken. However, in its determination, the Commission further found that it had no power under the 2004 Act to admit into evidence documents over which a claim of legal professional privilege was asserted and found to apply. While it is understood that the Special Liquidators offered a limited waiver of legal privilege for certain transactions to the Commission, nonetheless the Commission considered that it could not proceed further or admit into evidence such documents.
It is clear from the Commission’s decision on legal advice privilege set out in Determination 1, that the Commission was only seeking to obtain those documents which the directors of IBRC have received in the past which relate to legal advice which they might have received in respect of the write-offs of certain loans by IBRC and which are the subject of the current investigation. While the Special Liquidators were willing to disclose the documents to the Commission for the purpose of the investigation, it did not consent to the documents being provided to any third parties although the Special Liquidators agreed to consider waiving privilege on a case by case basis. The inability to forward such documents to the former directors of IBRC would, in the view of the Commission, deprive them of their right to fair procedures and their right to respond to the Commission in a meaningful way.
Section 6 addresses the concerns raised by the Commission. Firstly, subsection (1) introduces a general requirement on the Special Liquidators to comply with all directions by the Commission under the 2004 Act.
With respect to the assertion of legal privilege by the Special Liquidators in respect of documents previously received by the directors of IBRC, subsection (2) will amend the Irish Bank Resolution Corporation Act 2013 to insert a new provision into section 9 of that Act. Section 9 provides for the Minister for Finance to issue instructions and directions to the special liquidators and the new subsection (2A) to be inserted by this Bill will provide that the Minister may, for the purpose of enabling the Commission of Investigation to perform its functions, give a direction to the special liquidator to do or refrain from doing a specified act. This may include a direction from the Minister to the Special Liquidators to waive legal professional privilege. There is no obligation on the Minister to issue such a direction and it will only arise where the Commission requests the Minister to do so and informs the Minister, in writing, that the direction is necessary to enable the Commission to perform its functions and it is in the public interest to do so. The basis for issuing such a direction would be the connection to the purposes of the IBRC Act as set out under section 3 of that Act and which, I remind this House, includes “to protect the interests of the taxpayer”.
Section 7 will disapply section 118 of the Companies Act 1990 to enable the Irish Stock Exchange to provide confidential information to the IBRC Commission who may admit it into evidence. Determination 3 of the Commission, published in April, concluded that certain documents sought from the Stock Exchange were confidential pursuant to section 118 which provides for professional secrecy in respect of documents obtained by the Stock Exchange in pursuance of its functions under Part V of the 1990 Act in relation to insider dealing. As this is effectively a statutory duty of confidentiality, section 7 of the Bill will disapply it in respect of the disclosure of information to the Commission.
Finally, in terms of the substantive provisions of the Bill, section 8 will amend the Commissions of Investigation Act 2004 but only insofar as it applies to the IBRC Commission of Investigation.
Paragraph (a) amends the definition of document under the 2004 Act so that it replicates the definition under section 2 of this Bill.
Paragraph (b) amends section 34 of the 2004 Act, again only insofar as it applies to the IBRC Commission. Under section 34, a draft of any report by a Commission of Investigation must be distributed, in advance of submission to the specified Minister, to any person who is identified or identifiable in that report. The provision in section 8(b) of this Bill will limit the distribution of the report to persons in respect of whom there is an adverse finding. This has been specifically requested by the Commission to reduce the level of distribution which would otherwise be required on the basis that there is a strong likelihood of many persons being identified in the report but in respect of whom there would be no adverse finding.
Section 9 deals with the commencement of the legislation.
I think the members of this House will agree that although this is not a long Bill, it will provide significant additional powers to the Commission of Investigation into IBRC. Given the conclusions and recommendations reached by the Commission in the Determinations and Interim Reports published to date, and following consultation with the Opposition, and with the Commission itself during the drafting of this Bill, all of these provisions are proposed in order to ensure that the task set by this House back in June 2015 is conducted as effectively as possible.
I remind Senators that the very significant public concerns regarding certain transactions carried out by IBRC, and which were recognised and acknowledged by this House, must be addressed in a comprehensive manner.
Finally, before I finish I would just like to return to a matter that I briefly mentioned earlier. Given the number of transactions undertaken by IBRC which have been identified and which involve losses of greater than €10 million, I know that amended Terms of Reference are being brought forward which propose a modular approach to the investigation with a focus in the first phase on the Siteserv transaction, being an issue of significant public concern raised in this House. This is a pragmatic approach which will allow the Commission to focus its efforts in the first phase. A draft Order with the revised Terms of Reference will be brought before the Houses later this week for approval.
I also understand that, as requested by the Commission under section 6(6) of the 2004 Act, the Taoiseach has recently agreed to extend the timeframe for the Commission until end-October 2016. This will allow the Commission to continue its preparatory work while the legislation is being enacted and the terms of reference amended as I have outlined.
Again, I would like to thank the Leaders and members of the Opposition for their contribution in reaching a solution to the issues raised by the Commission and which would, if unresolved, have undermined the ability of that Commission to reach findings in relation to the investigations involved.
I look forward to hearing the contributions from the members today.
Thank you.