“We will amend the rules to ensure that no senior public servant (including political appointees) or Minister can work in the private sector in any area involving a potential conflict of interest with their former area of public employment, until at least two years have elapsed after they have left the public service” Fine Gael/Labour Programme for Government March 2011
Fine Gael and Labour came to power with a programme for government which promised to strengthen safeguards to prevent state employees with privileged access to confidential information and policy, from quitting to work in the private sector where they might expect to be enriched by virtue of formerly privileged access. This followed a decade of so-called “revolving doors” which is a misnomer because it is used to describe one-way traffic where senior civil servants including secretary generals at government Departments left for lucrative positions in the private sector
What the programme for government promised was a so-called “cooling off period” of “at least two years” in the case of “senior public servants including political appointees” In recent months, we have learned that not all employees of the Government are civil servants – no, staff at the National Treasury Management Agency and NAMA aren’t for example, despite employees in these two agencies having access to the most commercially sensitive information in the State.
So what is the Government doing to tackle the potential for both perceived and actual conflicts of interest, when such staff leave the employ of the State?
Well, it seems there is an honour system where such staff are covered by a range of legislation – Official Secrets Act and NTMA Act mostly – which forbids them from disclosing or using their insider knowledge. This must mean that quite senior executives must be fighting every fibre of their being to resist exploiting their knowledge. And it must be a great temptation because after all, it will generally be impossible to prove that the departing state employee has broken the rules. Yes, Enda Farrell at NAMA was just dumb in creating an electronic trail for his alleged leaking of loan details, but how difficult would it have been to memorise details of the most significant loans? And how could it be proven that the knowledge was exploited?
The former Head of the Shareholder Management Unit in the Department of Finance Michael Torpey quit in January 2013 and will be working at Bank of Ireland in a very senior position by the end of March 2013. Is Michael supposed to suppress his colossal inside knowledge of not just Bank of Ireland, but also his knowledge of the other two competing pillar banks AIB/EBS and Permanent TSB. And will Michael also suppress his knowledge of Minister for Finance Michael Noonan’s position on policies and strategy, not just for BoI but AIB and PTSB. The official position is yes, that he must indeed forget about what he knows, and indeed, he must suppress any urge to share information or act upon it. It should be as if Michael hasn’t been working at the Department of Finance for the past two years.
So far in 2013, nine staff have quit the NTMA and none are covered by senior civil servant cooling off periods. In the past eight months alone, at least three NTMA staff have moved to positions in Irish banks.
If the Official Secrets Act and the NTMA Act were sufficient to stop conflicts of interest arising with departing NTMA staff, then why impose a cooling off period at all on any civil servant, just get them to sign the Official Secrets Act and let them off straightaway. How would that be any different to how NTMA staff are treated?
Minister Noonan belief in the potency of the Official Secrets Act and NTMA Act to stop conflicts of interest is as fantastical as that little memory eraser stick in Men In Black. But in 2012, this is the sort of drivel spouted by our Minister for Finance.
Parliamentary questions this week reveal the Minister’s faith in the honour system as well as outline the treatment of civil servants.
Deputy Pearse Doherty: To ask the Minister for Finance further to the appointment that he announced and welcomed, of the former head of the Shareholder Management Unit (details supplied) to a position at Bank of Ireland, if he will set out the assessment that has taken place in his Department of their knowledge of the workings of Allied Irish Banks and Permanent TSB acquired in his former position; and if this knowledge may give Bank of Ireland an unfair advantage in Irish banking sector competition..
Deputy Pearse Doherty: To ask the Minister for Finance further to the appointment of the former head of the Shareholder Management Unit, to a position at Bank of Ireland, (details supplied), his views, as the holder of 99.8% of the shares in Allied Irish Banks, on any damage to the prospects of AIB occasioned by the appointment.
Minister for Finance, Michael Noonan: I propose to answer questions 225 and 226 together. On the issue of the involvement of the former head of the Shareholder Management Unit, the officer went on holidays to Australia on 12 December, 2012 and did not return to the Department until January 14th, 2013 at which time he tendered his resignation and in accordance with normal practice will not take up duty in the banks for another two months. Hence there is effectively a cordon sanitaire in operation for three months in this instance.
All civil servants are subject to a number of confidentiality clauses, these also apply to NTMA staff seconded to the Department. I can confirm that the official has signed the following documents:-
(1) Official Secrecy and Integrity Circular15/1979
(2) Freedom of Information Circular 7/98
(3) Official Secrecy: Budget Preparations Circular 27/95
(4) Software Use, Acquisition and Management Policy Office Notice 04/02
(5) Department of Finance Information and Communications Technology Usage Policy
Summary Office Notice 01/2006
All these give further protection around the confidentiality of information involved.
Deputy Pearse Doherty: To ask the Minister for Public Expenditure and Reform the current practice enacted for senior civil servants transferring from public sector roles into the private sector which may contain conflicts of interest; if there is a cooling off period; and the timeframe for that period..
Minister for Public Expenditure and Reform, Brendan Howlin: I propose to take questions 355 and 356 together.
The information requested by the Deputy relating to the requirements applying to senior civil servants taking up employment outside of the Civil Service in the circumstances set out in the Deputy’s question, can be found in section 20 the Civil Service Code of Standards and Behaviour which is available at the Standards in Public Office Commission’s website ( http://www.sipo.ie.).
Civil servants who hold positions which are “designated positions” for the purposes of the Ethics Acts are prohibited, within twelve months of resigning or retiring from the service, from accepting an offer of appointment from an employer outside the Civil Service or an engagement in a particular consultancy project, without first obtaining approval from the Outside Appointments Board – in the case of officers at and above Assistant Secretary level or the appropriate Secretary-General / Head of Office otherwise.
This would apply where the nature and terms of such appointment or engagement could lead to a conflict of interest.
Applications are considered by the Outside Appointments Board on the basis of determining whether or not a clear conflict of interest exists. The Board can either approve the take up of an appointment, the acceptance of an engagement, attach conditions or recommend against the appointment. The composition, operation and reporting arrangements for the Board are set out in section 21 of the Code.
Officers must also continue to observe the restrictions imposed by the Official Secrets Act 1963. Departments and Offices are required under the Code to monitor the acceptance of outside appointments by civil servants and former civil servants.
Significant progress has been made in developing my proposals for the regulation of lobbying in relation to the commitment included in the Programme for Government referred to in the Deputy’s question. The consultation process undertaken on this commitment was based on the OECD Principles for Transparency and Integrity in lobbying which recommend that it may be necessary to impose a ‘cooling-off’ period that temporarily restricts former public officials from lobbying their past organisations.
My proposals in this area – which draw on the Outside Appointments Board model applying to senior civil servants – will be published following consideration by Government as part of the General Scheme of a Regulation of Lobbying Bill.
The relevant OECD principles also highlight the requirement for countries to consider establishing restrictions for public officials leaving office to address other potential conflict of interest situations that could arise. It is planned that these other elements of the Programme for Government commitment which also arise from the recommendations contained in the final report of the Mahon Tribunal will be addressed through the proposed reform of the legislative framework for ethics which is currently underway.