Anglo Irish Asset Finance PLC stands out (AIAF for short). The company directors have changed somewhat, but for most of the relevant period the directors were:

Brian Linehan (Not the Minister for Finance)
Gordon Parker (FG Parker)
J Brydie (Jim/James Brydie)
TP Walsh (Thomas Walsh)

AIAF, under cashflows, in the 12 months to September 30, 2008, had losses before tax of £116,805,450.That was before the bank guarantee.

In the 15 month period between September 30, 2008 and December 31, 2009, the company had losses before tax of £1,197,670,982, or almost £1.2 billion. (In an interim management report in March 2009, the company reported a loss of £972m, including £613m on a Yen deal that went badly wrong). The majority of the £1.2bn loss was from UK investments, £88m was from Mainland Europe. The company had £5.34bn in liabilities up to the end of 2009. Interest and similar income fell from £399m in the 2008 period, to £290m in the 2009 period. Trading losses would make your brain melt. In the 2008 fiscal year it lost £99m in “trading losses”, in the 2009 fiscal year it lost £613m. Provisions for impairment went from £124m to £974m in the 2008 to 2009 period.

Now for derivatives – and as far as I can tell, the taxpayer still holds these.

As of December 31, 2009, AIAF held £2,148,360,000 total derivative financial instruments, of which £1.74bn was interest rate swaps.

AIAF held £3.16bn in loans classified for sale to NAMA at year end 2009. Less provisions for impairment this is £2.3bn. But it was the £3.16bn that was designated on December 31.

Share capital was increased from 300,000,000 shares in 2008 to 3,300,000,000 in 2009. On November 18, 2008, 1,000,000,000 ordinary were issued at par for a consideration of £1 billion and subscnbed by CDB (U K ) Limited, the parent company, thereby increasing ordinary share capital by £1,000,000,000 to £1,220,000,000. Note 28 states:

In order to further strengthen the capital position of the Company, on 18th November 2008, the issued ordinary share capital of the Company was increased by £1,000,000,000. In addition AIBC agreed to the irrevocable write off of £200m of the intercompany loan between AIBC and the Company which has further increased the capital of the Company through the creation of a capital reserve of £200m.

Note 29 is on NAMA (in relation to AIAF’s parent in Dublin):

The transfer of assets to NAMA is a fundamental aspect of AlBC’s restructunng process. AIBC estimates that NAMA will acquire land and development loans and certain associated loans with a value of approximately £3,166m on a gross loan basis (i e before taking account of £864m of loan loss provisions) from the Company. AIBC and the Company have no control over the quantity of eligible assets that NAMA will acquire or over the valuation NAMA will place on those assets. NAMA has not confirmed to AIBC or the Company the total value of eligible assets it expects to purchase or the consideration it will pay in respect to those assets.

NAMA appear to have applied the following (Note 29):

Total assets as classified for sale, neither impaired or past due: £451m
Past due but not impaired: £176m
Impaired: £2.538bn

So let’s put it this way. NAMA have said that 80% of the loans are impaired as of December 2009. And 87% of all loans (either impaired or not) are related to just three sectors, retail (10%), residential development (37) and commercial development (40%).

As readers of this blog will know, her Office issued a preliminary decision in which NAMA was deemed not to be a public authority for the purposes of those regulations. I will reply to the preliminary decision shortly, after which a binding decision will be made by her office. The stakes are pretty high, and I believe – after speaking to a number of legal people – that I am correct on my reading of the SI, and the Office is fundamentally incorrect (in their preliminary decision at least).

I do find it perplexing that on the one hand Emily O’Reilly is complaining about NAMA not being under FOI, while on the other her office issued a preliminary decision that denied NAMA’s status as a public authority under the sister legislation to FOI. That might sound like criticism, and yes it is, albeit mild. But if the Office were to make a binding decision that NAMA was not a public authority, it gets far far more serious.

Let me be very clear here. NAMA is a public authority for the purposes of the Regulations. This is utterly clear. I believe the preliminary decision has erred both in law and in fact by:

Failing to find that NAMA is a public authority by reason of Regulation 3(1)(vi) of SI 133/2007;
Failing to apply the correct test when considering whether or not NAMA’s functions are administrative in nature;
Failing to find that NAMA is a public authority by reason of Regulation 3(1)(b) of SI 133/2007; and
Incorrectly finding that NAMA’s powers serve no public purpose and that it is a purely commercial entity.

I’ve had huge (read: massive) help in drafting my reply, but that person has asked to remain anonymous (for now at least). If the Office issues a binding decision that NAMA is not a public authority I believe the error will be significant enough that it would require a High Court action to correct. And this doesn’t just relate to NAMA – it relates to a large number of bodies in the State which would no longer fall under EIR on the basis of the NAMA precedent – which poses a question as to what bodies are or are not covered by the legislation. This affects us all.

Without going into the detail of the reply (it’s over 5,000 words in length so far), I would make two important points.

First, in her reply, the investigator states:

“I take the view that Article 3(1)(a) of the definition of “public authority” is meant to refer to a Department of State or local authority or other State body within the executive branch of government; it does not refer to a body with an economic or commercial mandate such as NAMA.”

I think this is one of many fundamental errors in the preliminary decision. 3(1)(a) could conceivably included many more bodies than those in the executive. But even if I’m wrong, that’s why 3(1)(b) is also worth looking at.

Second is NAMA’s own memoranda of association. You see when NAMA was established, it also established several limited companies, including National Asset Loan Management Limited. And the memoranda of association for this company includes, in article 9:

To purchase, take on lease, on licence, in exchange, upon option or otherwise acquire and hold any lands, buildings, property (whether leasehold or freehold) or any rights or interests therein or in respect thereof and to develop, improve, alter or manage the same or any part thereof in any way (including, without limitation, construction, demolition, landscaping, planting, draining and improving).

Now read the legislation (this is simpler than it might look):

3. (1) In these Regulations—

“public authority” means, subject to sub-article (2)—

(a) government or other public administration, including public advisory bodies, at national, regional or local level,
(b) any natural or legal person performing public administrative functions under national law, including specific duties, activities or services in relation to the environment, and
(c) any natural or legal person having public responsibilities or functions, or providing public services, relating to the environment under the control of a body or person falling within paragraph (a) or (b),

and includes—

(i) a Minister of the Government,
(ii) the Commissioners of Public Works in Ireland,
(iii) a local authority for the purposes of the Local Government Act 2001 (No. 37 of 2001),
(iv) a harbour authority within the meaning of the Harbours Act 1946 (No. 9 of 1946),
(v) the Health Service Executive established under the Health Act 2004 (No. 42 of 2004),
(vi) a board or other body (but not including a company under the Com- panies Acts) established by or under statute,
(vii) a company under the Companies Acts, in which all the shares are held—
(I) by or on behalf of a Minister of the Government, (II) by directors appointed by a Minister of the Government,
(III) by a board or other body within the meaning of paragraph (vi), or
(IV) by a company to which subparagraph (I) or (II) applies, having public administrative functions and responsibilities, and pos- sessing environmental information;

Here is my logic:

1. NAMA is a body established by or under statue, therefore it is a public authority under 3 (1) (vi). No decision has to be made about whether if falls under a, b or c: 3 (1) (vi) is entirely sufficient.
2. Even if the “and includes” part of the legislation instead said “or includes” NAMA would still be a public authority under 3 (b), since it carries out public administration. Believe it or not, the entire disagreement with the Information Commissioner’s office stems from what ‘and includes’ means here. I believe it is perfectly clear.
3. Even if NAMA was not under 3(b), it would be under 3(c), because, as outlined above it is a natural or legal person (a company), having public responsibilities or functions relating to the environment (by virtue of it carrying out demolitions or building that would affect the environment).

But the question is, should I have to bring a High Court action in order for the legislation to be read correctly?

The Directive itself (on which the SI was based) says:

Member States may provide that this definition shall not include bodies or institutions when acting in a judicial or legislative capacity. If their constitutional provisions at the date of adoption of this Directive make no provision for a review procedure within the meaning of Article 6, Member States may exclude those bodies or institutions from that definition.

But when transposing the legislation, we deliberately included parts (i) through (vii). It is a non-exhaustive list of bodies and categories of bodies which are to be considered public authorities for the purpose of the Regulations. No ifs, ands, ors or buts.

And one last thing. NAMA will be one of the biggest, if not the biggest land owner in the State. It will have the power to compulsorily purchase land, demolish houses, redevelop existing land… the list goes on. So let us remind ourselves what defines “environmental information” under the European legislation [my emphasis]:

“environmental information” means any information in written, visual, aural, electronic or any other material form on—

(a) the state of the elements of the environment, such as air and atmosphere, water, soil, land, landscape and natural sites including wetlands, coastal and marine areas, biological diversity and its components, including genetically modified organisms and the interaction among these elements,
(b) factors, such as substances, energy, noise, radiation or waste, including radioactive waste, emissions, discharges and other releases into the environment, affecting or likely to affect the elements of the environment,
(c) measures (including administrative measures), such as policies, legislation, plans, programmes, environmental agreements, and activities affecting or likely to affect the elements and factors referred to in paragraphs (a) and (b) as well as measures or activities designed to protect those elements,
(d) reports on the implementation of environmental legislation,
(e) cost-benefit and other economic analyses and assumptions used within the framework of the measures and activities referred to in paragraph (c), and
(f) the state of human health and safety, including the contamination of the food chain, where relevant, conditions of human life, cultural sites and built structures inasmuch as they are, or may be, affected by the state of the elements of the environment referred to in paragraph (a) or, through those elements, by any of the matters referred to in paragraphs (b) and (c);

HOME

Only caught this now, via Anthony; ‘Developers bribed planners with discounts on apartments‘.

Jim Stewert on Progressive Economy; ‘The privatisation board, what will it do?‘

Gerard O’Neill; gainfully employed.

I never thought I would say it, but Willie O’Dea TD is right. He proposes in today’s Sunday Independent that:

We should be seriously considering a scheme here where 100,000 people on the dole could be paid an extra €100 per week for the next 12 months to undertake vital work in their community. The work should match the people to their existing skills and training — whether that is in IT or building. It would be a social work programme, not a social welfare one.

Week’s read: Suzy Byrne; playing games with people’s health.

Colm Keaveney is a Labour Party Councillor in East Galway and a SIPTU official.

[...] Not sure if Colm knowns anything about transgender issues and the impact of waiting for surgery on peoples lives or indeed the impact of politicians spouting this sort of rubbish on the safety and mental health of transgendered people in Ireland. Well given that Colm was President of USI when I knew him and supported the development of structures for lgbt students one might have thought he would know better. It’s fairly clear he can’t see things with their eyes and empathise with them.

Jim O’Leary in The Irish Times; I should have been more pushy at opposing risk-taking in the bank.

A critical impediment to be overcome in the delivery of good corporate governance outcomes is asymmetry of information. Put crudely, the starting position is that a company’s managers possess all the relevant information while the board or at least the non-executive directors have none. The board is given as much information as management is prepared to share with it.

By information, I don’t just mean raw data; I mean the wherewithal to interpret the data intelligently. Nor do I mean only the kind of information that is amenable to quantification or communication in discrete form.

Basically, management was collectively (selectively?) incompetent?

Venividi (Ireland’s best photoblogger) Dublin port medallion. Worth spending some time on that blog, fantastic photo archive.

ScandalCentral; Fine Gael in crisis in Cork North Central?

P O’Neill has a puzzler; who’s getting Anglo’s €22bn?

WORLD

The Big Picture; Oil spill in Dalian China.

Valuable read – Marc Lynch of Foreign Policy; why the clash of civilisations won’t go away.

The power of these post 9/11  confrontational narratives about Islam has been on full display  of late.   What I like to call stupidstorms break out with alarming regularity, driven by right wing media:  the frenzy around anodyne comments by the NASA director about engaging Muslims, the firing of Octavia Nasr over her Hezbollah tweet, the especially nasty clashes over the Ground Zero mosque complex.

The sheer amount of disinformation, vitriol, and agitation against Muslims and Islam in pockets of the right wing media (new and old) beggars belief.  Part of the blame also lies with right wing politicians, who cynically (or, more frightening, sincerely) exploit the anti-Islam tropes to drum up votes and to grab attention.   And part of the blame lies in the reality of the persistence and terrorist attacks of al-Qaeda affiliates and sympathizers. , and the polarizing effects of the escalating arguments over Israel, Gaza, and Iran.   It isn’t just the right wing echo chamber, though — the frenzies over the Captain Underpants failed bomber and the Times Square failed bomber show a mainstream media still hardwired to fall back into the comfortable tropes of the war on terror.

David Cohn; the ethical argument for transparency in journalism.

And herein lies the base of this whole thought process. It comes down to the individual. It is the individual, as part of a collective, that journalism seeks to inform. The individual should be actively participating in the dissemination of information for several reasons:

1. On a utilitarian level, they will become more informed and help inform more people. If the good of journalism is to inform, then letting more people participate will inform more people. Similarly, the mission of roads is to enable travel/transportation, not to safeguard public transportation. (There could be unintended consequences, of source, such as pollution.) The mission of journalism is to inform, not to safeguard journalism companies. A network has infinity more connections and that requires active participation and self-informed informants [...]

Kenyan Pundit; those with nothing?

Oh boy.

So what bothered me was a missed opportunity to frame the images purely as look how creative these young kids are, without the “they-are-so-simple-and-happy-in-their-poverty” BS.

Glenn Greenwald; the revolving door spins faster on healthcare reform.

OTHER

Sage Francis knows how to play with words. Mermaids are Sea Sluts. Love this poem. Video below.

Lastly; continuing the Feynman theme from last week. ‘Take the world from another point of view’ part 1. Definitely worth watching all four parts. Feyman is the dude, dude.

The Green Party Leader and Environment Minister John Gormley has said that he intends to change the way politics is funded…

A quick look back into The Irish Times archive for their coverage of the announcement of John Gormley’s selection as environment minister. July 7 2007;

The newly elected leader of the Green Party, Minister for the Environment John Gormley, said yesterday he wants changes in the ways political parties are funded.

That was 1,103 days ago. Or 157 weeks. 26,472 hours. 95,299,200 seconds.

Tick-tock tick-tock.

The documents contain the minutes of a meeting between the Department of Finance and Anglo representatives in December 2008. Sean FitzPatrick and Kevin Cardiff were present. At the meeting, Anglo proposed that Standard Life and the Irish Government would help underwrite a rights issue, the draft plan is included in the documents. It also contains a letter from Anglo chairman Donal O’Connor, dated January 15, 2009, where he states:

First, we have considered the funding and the assets and liabilities of the Bank and we confirmthat in the contextof the Government’s commitment the Bank remains solvent. Secondly, while we cannot predict the response of our depositors and other creditors to nationalisation with accuracy, we confirm our belief that, given all necessary support, the Bank can remain a viable institution in the context of nationalisation.

And as late as January 8, days before nationalisation, staff at the Department appeared to be still asking how many branches Anglo had.

Tony,
Further to our conversation this morning, we have offices in six foreign jurisdictions:
1. The UK operations are a branch in accordance with Article 25 of Directive 2006/48/EC. This is usually referred to as “an EU branch”. Partially regulated by the FSA.
2. Germany – as UK. Partially regulated by the BaFin.
3. Austria – as UK. Partially regulated by the FMA.
4. United States – three representative offices in Massachusetts, New York and Illinoislicensed by the Federal Reserve Bank and each State Regulator.
5. Isle of Han – a subsidiary licensed by the Isle of Man Financial Supervision Commission.
6. Jersey – a branch licensed by the Jersey Financial Services Commission.

I also confirm our conversation that we will launch the Mortgage Bank without the Govt Guarantee in place, and once the CEBS rules become clearer on the disclosure for Guarantors we will look to have the Mortgage Bank included.

And it includes this gem from Sean FitzPatrick, on how long it would take Standard Life to do due diligence:

SF Indicated that due diligence would take circa 48 hours. He acknowledged that they need to prove that they can get a substantial part of the funds required and that they need to bridge a credibility gap between Finance/FR and Anglo’s thinking.

Anglo meetings/emails

This is a lengthy post. The next series of paragraphs are all context to the whole Rody Molloy pension issue. You may find being reminded of the details useful, if so, read on. If not scroll down and click ‘Continued’ and it’ll bring right into the main subject…

Readers may remember Mr Molloy finished in his role at Fás in strange circumstances following a prolonged period where various questions regarding his excessive expenses, his handling of internal procedures and his general management abilities, were raised.

For a period in September 2009 there was confusion about whether he resigned or had been removed from his position. This would later become important as it would have effected his pension entitlements.

On September 24 the Public Accounts Committee was told he had received a generous pension enhancement valued at more than €1m. Peter McCloone and Sean Gorman spoke of how they brokered deal on behalf of Fás with Mr Molloy, part of which involved him agreeing to resign. Questions were immediately asked about how the deal was negotiated. “There was no question of pals or anything like that”, Gorman told the PAC. They admitted no legal advice had been taken.

As the media pounded on the stunning admission that no legal advice had been sought, ministers desperately attempted to pass the buck. It became clear that both the minister for enterprise, then Mary Coughlan, and minister for finance, Brian Lenihan would have been required to sign-off on the deal. The Green Party quickly distanced themselves from the story, obviously uncomfortable with the deal and how it came about. Mary Coughlan ordered a review into the circumstances surrounding the deal.

Two days after the PAC meeting An Taoiseach Brian Cowen was pushed on the issue. He admitted that Mr Molloy did not threaten legal action during discussions. He said Mr Molloy acted “honourably” by resigning and claimed the enhanced pension fell within departmental guidelines. Prior to this ,in an attempt to excuse the the cost of the deal, ministers had insinuated that Mr Molloy would have initiated a lengthy legal action which would have cost the taxpayer far more than the €1m golden handshake. Nobody (me included) bar one letter writer, seemed to notice that even if this had been the case Fas could seemingly have used the Employment Appeals Tribunal or Rights Commissioner, both of which are inexpensive as they require no legal teams. Even if Mr Molloy had won his case there the maximum award would have been two years salary – about €440,000 – much less than the million euro deal signed-off by Government.

We were the first to question whether Mr Molloy’s pension did in fact fall within the guidelines cited by An Taoiseach when we published them in full on this website. It wasn’t until two weeks later that the print media returned to this element. Several more reports in various media outlets continued to state unchallenged that the deal was within departmental guidelines. Some two weeks later Shane Phelan of The Irish Independent destroyed that myth with a frontpage story about how even senior civil servants in the department didn’t believe the enhanced pension fell within the guidelines. The enhancements should only have been available as part of a contract termination by the Government but Mr Molloy had resigned, as we’d noted earlier on this website.

The new revelations, contained in emails and correspondence seen by the Irish Independent, will come as a major embarrassment to Taoiseach Brian Cowen.

He insisted just weeks ago that all proper guidelines had been followed.

[...] The memos show at least three different Department of Finance officials warned prior to the deal being approved that it fell outside of what was allowed in the guidelines.

In comments made on September 25, he also said formal cabinet approval was not needed for the deal, even though it is now known there was clear advice from within the department that the matter should be referred to the Government.

When asked about the issue three days after the Taoiseach’s comments, Tanaiste Mary Coughlan made no reference to the department guidelines and instead said the legal basis for the deal was covered by the Labour Services Act.

However, none of the extensive departmental correspondence seen by the Irish Independent refers to this act. In fact, notes from negotiations show that those involved were only concerned about two main issues — the terms of Mr Molloy’s contract and what was allowable under the department guidelines.

Guidelines are essentially plain-English versions of legislation.

As part of the review initiated by Mary Coughlan legal advice was sought from the attorney general and thereafter no alteration was made to the pension deal.

In recent months I’ve been attempting to find out how exactly Mr Molloy’s pension is now based in law. It hasn’t been simple.

The department claimed that the pension falls under Section 6 of the aformentioned Labour Services Act. However, on examining the legislation with the excellent help of Ms Catherine Ceitin, who was involved in breaking the original story with Shane Phelan and Daniel McConnell, I could not see any provision allowing enhanced pension packages. This indicated that there should have be a statutory instrument – an amendment – made to the legislation to allow for the enhancements.

Such instances would not be without precedent, the Government had previously written an statutory instrument for a former director general to enhance his pension entitlements on leaving Fás. John Lynch’s pension was boosted from 17 years to 40 years and he was given a lump sum payment of more than €130,000 under the “Doctor John Lynch Scheme”, a statutory instrument which can only be applied to him. This was kept quiet until Richard Oakley broke the story for The Sunday Times in October. Mr Lynch is now head of CIÉ.

On May 4 I called the Department of Enterprise, Trade and Employment about Mr Molloy’s pension and was asked, as per usual, to put my enquiry in writing. I began by asking them to confirm the Act and section under which the pension was based.

I have a brief question about Rody Molloy’s pension. Under what legislation was Mr Molloy given the add-ons (for want of a better description) to his pension? It seems to have been established that his pension does not fall within the guidelines cited. There does not appear to have been any amendment made to the Fás Superannuation Act 1998 which would allow for the add-ons under that act. Is his pension under the Labour Services Act so? If so, which section? If not, which Act?

There was no reply for a week, so I began calling. Eventually I was told responsibility for Fás had been passed over to the department of education and that they would now be handling my questions. Their response came on May 14…

This severance package for the former Director General, Rody Molloy, was granted in accordance with Section 6(3) of the Labour Services Act 1987 which states that “the Director General shall hold office on and subject to such terms and conditions (including terms and conditions relating to remuneration and superannuation) as may be determined by the Minister [for Enterprise, Trade and Employment] with the consent of the Minister for Finance”.

I replied on May 17…

The same Act (Labour Services, 1987) states in Section 8 that “No superannuation benefit shall be granted by An Foras on the resignation, retirement or death of a member of the staff of An Foras otherwise than in accordance with a scheme or schemes under this section”. Thus, as per my understanding, an amendment would be required in order for Mr Molloy to be granted benefits outside current schemes (which do not allow for enhancements like Mr Molloy received) under the Act. That would be similar to what happened with Mr Molloy’s predecessor, John Lynch, who is the sole beneficiary of the “Dr John Lynch Scheme”. The Dr John Lynch Scheme scheme amends the Act to make it legal for Mr Lynch to receive additional benefits.

Can you tell me if there has been a “Rody Molloy Scheme”, or any sort of amendment that could give Mr Molloy’s pension a legislative basis introduced (via a statutory instrument, presumably)? If so, can you supply a copy of this amendment/instrument?

And if there is not, does the department agree that Mr Molloy’s pension add-ons, for want of a better phrase, have no legal basis?

At lunchtime on Friday May 28 I received a reply…

The superannuation package, which includes the pension and lump-sum was granted with the required approvals under SI 514/1998 – An Foras Aiseanna Saothair Superannuation Scheme.

The ex-gratia payment was granted under the provisions Section 6 of the Labour Services Act, 1987.

The Labour Services Act 1987 provides that FAS shall be a body to acquire and dispose of land and any other property and accordingly the Board of FAS dealt with the matter of the car in accordance with these provisions.

Hardly a direct response.

The statutory instrument ‘SI 514/1998′ can be viewed here. It’s interesting because it only applies only to Fás staff whose employment comes under section 7 of the Labour Services Act (see parts 3.10 through 3.14). My understanding was that Mr Molloy was hired as director general, had only ever held that position, and that the director general’s employment came only under section 6 of the Act.

After taking some time off I began looking to confirm the terms of Mr Molloy’s pension and employment. In doing so I sought copies of the legal advice obtained as part of the review of his pension. I figured that if the guidelines are questioned maybe the basis of the pension itself was shaky.

July 5;

I’m wondering if it’s possible to be supplied with the legal advice received by the minister in relation to Mr. Molloy’s pension after the media interest it.

As you may remember there was initial interest in the enhanced nature of the pension, then it emerged there was no legal advice taken by the minister into whether the enhancements were required, then – and this is what I wish to confirm/clarify/obtain – the minister took legal advice in the context of a subsequent review of the matter and it was found that on the basis of the information available there was no legal basis to set aside or modify the severance package agreed with Mr Molloy. This advice, [if it was] taken in the later context, is what I wish to obtain.

Also, briefly; can the department confirm that Mr Molloy was hired under section 6 of the Labour Services Act 1987. I know his pension comes under section 6 as per previous correspondence with your office – and I’m not aware of any other section under which he could have be hired – I just wish to confirm this officially.

In a phone call on July 12 a spokeswoman for the Department of Education confirmed that Mr Molloy had only ever been employed under section 6 of the Act and again stated his pension was under this section.

On July 17 I received this response via email to my other enquiries…

Legal advice was sought from the Attorney General in the context of a review of the severance package agreed with Mr Molloy and it was found that on the basis of the information available there was no legal basis to set aside or modify the severance package agreed with Mr Molloy.

In accordance with normal practice the Minister is not in a position to release the advice of the Attorney General.

The value of preserving legal privilege and confidentiality in legal advices given by the Office of the Attorney General and the potential for damaging the State’s interests has been long recognised. Hence, it would not be in the best interests of the State to release the Attorney General’s advices.

Section 6 of the Labour Services Act 1997 provides the legal basis for the appointment of the Director General of FAS.

Yeh. And that’s where I’m at now.

You lot are smarter than me. Let me put the yarn into one paragraph and maybe a reader can figure this out; the Department say the whole thing came under section 6. I say that’d be fine for a standard pension but because there were enhancements a statutory instrument was required to give the pension a basis in law, as per John Lynch. The department appear to accept this and cite SI 514/1998… but that SI can’t apply to Mr Molloy because his pension and employment was all under section 6, while SI 514/1998 is only relevant to individuals employed under section 7.

So where is the relevant statutory instrument? And if none such exists, what’s the legal basis for the pension enhancements as signed-off on by the Tánaiste and Minister for Finance?

I’ve asked a barrister and two solicitors about this and they’re just as confused as me. Leo Varadkar also tabled a question in November last year relating to it, to which he has received no response [PDF link. Question 236]. For months two members of the public have been raising similar points with Darragh O’Brien, a Fianna Fáil TD with extensive experience in the pensions business, they too have received no reply.

If only the department would release that legal advice, it might clear some things up. Until then, unless someone can answer them through other means, the questions remain.

It is not just Fianna Fáil that has behaved badly over ethical legislation and transparency. Because political donations below a certain limit do not have to be disclosed to the standards commission, many donations were set below the limit.. The commission also suspects that large donations may be split up into small amounts to avoid disclosure. Last year, when local, European and byelections were held, not a single donation was publicly recorded by Fianna Fáil, Fine Gael or the Labour Party. This is a disgrace. Ethical standards and political funding mechanisms require fundamental reform.

Interesting bit in bold there.

Parties use various methods to effectively bypass the donations system. We’ve written about this pretty extensively in the past. Two pieces maybe worth re-reading if you’re interested in the topic. This one on a prior Times leader on funding reform which I disagreed with…

One oddity of the current system for donations to individuals is related to declaration thresholds. Despite being obliged to open an account once they receive a donation exceeding €126.97, politicians don’t have to declare full details of any donations less than €643.97 to the Standards in Public Office Commission. This means the bank account, for the purposes of transparency, is effectively useless unless a donation exceeding €643.97 is made. Reducing the declaration threshold from €643.97 to €126.97 while ensuring all transactions below the lower figure are on record anonymously would be beneficial to the transparency of the funding process. This would mean the public could inspect the credit and debit side of the donations account upon declaration and see if there were excessive amounts of donations made for more than, say, €100. If this was the case and SIPO suspected several of these may have come from one individual, SIPO should have the right to inspect the account in detail.

Of course a significant increase in the level penalties imposed against those who breach the above would also be warranted also. That almost goes without saying.

And one of the first posts on this site from way-back-when, when I tended to adopt a more cynical radical tone; Want to bypass our donations system? No problem.

The dreamer in me has been telling for while not the write this post. “Don’t tell the good politicians how the bold ones work the system”, it screamed. The other 99% of me said, “fuck it, they all know about this anyway, it’s whether they chose to work it or not is the question”. So here, dear reader, I tell you how I understand our public representatives can work the donations system…

Pretty much a how-to, that one, but perhaps insightful.

CDB UK Ltd 2007

CDB UK Ltd 2008

CDB UK Ltd 2009

First up is Anglo Irish Asset Finance, 2008 and 2009 accounts. The 2009 accounts contain the now infamous yen loss, Colm McCarthy referred to recently. The notes to the accounts are particularly interesting

Anglo Irish Asset Finance PLC 2008 Accounts

Anglo Irish Asset Finance 2009 Accounts

I’m averse to publishing press releases in full but in this case I think there’s merit in seeing it straight from the horses mouth…

PRESS RELEASE –  20 July 2010

STANDARDS IN PUBLIC OFFICE COMMISSION ANNUAL REPORT 2009

In its 8th annual report, the Standards Commission  recommends that liabilities should be declared by public representatives and public servants in their annual statements of interests. The Ethics Acts at present provide for annual disclosure of ‘registrable interests’, but this does not include liabilities. The Standards Commission believes that a public representative or public servant who has significant liabilities to, for example, a financial institution, could be materially influenced in the course of performing their duties where such duties involve dealing with that financial institution and where the actions of the public servant could conceivably affect their own interests. The Commission maintains that it is in the public interest that such liabilities be appropriately disclosed. Accordingly, the Standards Commission recommends that the ethics legislation be amended to provide that a liability above a certain threshold be regarded as a registrable interest (pages 29 and 30).

Whistleblowers

“A major factor in the low level of complaints received by the Standards Commission is fear on the part of potential whistleblowers of the consequences of reporting wrongdoing ” says Mr Justice M. P. Smith, Chairman of the Standards in Public Office Commission, in the eighth annual report of the Standards Commission published today. (Pages 17 to 19)

The Standards Commission says that the piecemeal approach to introducing protection for whistleblowers may have created confusion as to whether protection is available or indeed whether there is a real commitment to encouraging whistleblowers to come forward. There is a strong public interest in ensuring that persons who are aware of wrongdoing are encouraged to report it to the appropriate authorities.

The Commission welcomes a Transparency International study of whistleblower protection in ten European countries, published in January 2010, which found that the Irish approach is deeply flawed. It endorses the report’s recommendation that a comprehensive public interest disclosure and whistleblower protection law be introduced as a matter of urgency, saying that “as well as the specific protections which would be afforded, such a step would send out a clear signal that wrongdoing is not to be tolerated and that reporting in good faith of wrongdoing is to be strongly encouraged.”

Statement of Ethical Principles

The Standards Commission has also proposed that a clear high level statement of the ethical principles to be followed by public servants and public representatives should be adopted, either in primary legislation or in each of the relevant statutory codes of conduct. It considers that the UK Committee on Standards in Public Life’s Seven Principles of Public Life might provide a good starting point for discussion as to the fundamental principles that each public servant or public representative should know they must follow. The ultimately agreed principles should be incorporated into the Ethics Acts as public service values. Failure to abide by these principles could be cited in any complaint under the relevant ethics legislation (page 23).

Political Party Funding

The Standards Commission also supervised compliance with the Electoral Acts by TDs, Senators & MEPs, by political parties and their accounting units and by “third parties” and the report shows that over €13.6 million was paid to political parties out of Exchequer funds in 2009. The Standards Commission repeats its call for increased transparency in political party funding in order to strengthen public trust in parties and minimise corruption risks. (pages 32 to 41).

Recommendations for Change

Once again this year, the Standards Commission summarises its recommendations for change to the Ethics, Electoral and Party Leaders Allowance legislation in Appendix 4 of the report (pages 49 to 51).

You can read the report here.