Ireland may empower bank probe after leaked tapes anger voters

Wed Jun 26, 2013 11:09am EDT

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By Padraic Halpin

DUBLIN, June 26 (Reuters) - Ireland could try to beef up an inquiry into the 2008 rescue of failed banks that eventually forced the country into an EU bailout, after embarrassing revelations that a major lender may have misled the central bank.

With public outrage growing over bankers who were taped laughing about the unfolding crisis, a government source said a referendum rejected by voters in 2011 to give lawmakers powers to point the finger of blame at individuals might be re-run.

"Once the referendum was defeated, the attitude of government was to accept that, but the manner in which this has burst into the public domain again requires government to look at every option," the source told Reuters.

Concerns over how robust any parliamentary inquiry will be have come to the fore after the Irish Independent newspaper released transcripts of phone conversations in September 2008 between executives at the now-liquidated Anglo Irish Bank.

In the tapes, Anglo executives joked about how much cash would be needed to keep the bank afloat, and sang the German national anthem and laughed as they discussed money flowing in from other countries after a guarantee of deposits.

Rescuing Anglo and two other banks eventually cost taxpayers some 30 billion euros - almost one-fifth of annual output - and led to Ireland's 85 billion euro IMF/EU bailout in late 2010.

The executives have denied any wrongdoing or intention to mislead the central bank.

On Wednesday, the paper's headline cited Anglo's then-chief executive, David Drumm, saying "Another day, another billion".

The remarks are likely to stoke more fury among Ireland's 4.6 million people, many of whom have had salaries cut and faced a raft of tax hikes to help pay debts resulting from the rescue.

The revelations are also seen as damaging to Ireland's efforts to secure more European funds to recapitalise the banks, wrecked when a property bubble burst after years of reckless lending, and so cut the debt it took on to bail them out.

The Irish have remained sanguine through the country's deep economic crisis, rarely taking to the streets in protest, but reaction to the so-called 'Anglo Tapes' has shown there is latent anger among voters.

MORE DELAYS

Distracted by a presidential election on the same day, the government ran a lacklustre campaign in 2011 on a referendum that proposed giving parliament powers to examine the conduct of individuals and make findings of fact against them. Voters were also swung by a late intervention from a group of former Attorneys General who warned that the change to the constitution would give politicians too much power.

A re-run would probably succeed, but would further delay a probe into events that are already nearly five years old.

The alternative is proposed legislation granting more limited powers, which would prohibit parliamentary committees from making adverse findings against individuals. Those called to testify might also be able to avoid answering questions.

Prime Minister Enda Kenny, who was leader of the opposition during the 2008 rescue, told parliament on Wednesday that the question of repeating the referendum had been raised but that he had not given a definitive answer.

Kenny has pledged that the currently proposed legislation will be passed by August, but given the amount of preparatory work required, witnesses are likely to be called only next year.

That could mean the inquiry clashes with a trial on fraud charges of three former Anglo executives - including ex-chairman Sean FitzPatrick - also set for 2014.

"I would be somewhat doubtful as to whether, under the Irish constitution, they will be able to get the kind of information the Irish public is looking for," said Antoin Murphy, economics professor at Trinity College Dublin.

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