Last November 2012, Minister for Finance Michael Noonan made an important discovery: he, or rather one of them mandarins in his Department of Finance discovered that section 33AK of the Central Bank Act 1942 provided the Central Bank of Ireland with a confidentiality defence to requests for information about the operations of banks in Ireland. Section 33AK is in fact a vast 2,500-word section inserted into the Central Bank and Financial Services Authority of Ireland Act 2003 and it allows the Minister to blame the Central Bank when declining to provide information on bank operations. Last November 2012, in a response to a parliamentary question, Minister Noonan said
“section 33AK(1A) prohibits disclosure by the Bank, its officers, employees, and agents, of confidential information concerning-
(a) the business of any person or body whether corporate or incorporate that has come to the person’s knowledge through the person’s office or employment with the Bank, or
(b) any matter arising in connection with the performance of the functions of the Bank or the exercise of its powers,
where the disclosure considered would be prohibited by the Rome Treaty, the ESCB Statute or the “Supervisory Directives”, as defined in section 33AK(10).
The most relevant supervisory directive in this instance is Directive 2006/48/EC.
Title V, Chapter 1, Article 44 of Directive 2006/48/EC, for example, imposes an obligation, on “competent authorities” (of which the Central Bank is one) for the purposes of that Directive to operate on the basis of professional secrecy. While a number of pathways for release of information are provided in the Directive (for example, a competent authority may release information where necessary to “bodies involved in the liquidation and bankruptcy of credit institutions and in other similar procedures” (see Article 44)), none of these facilitate release of information in this case.” [concludes]
As far as I can see, Section 33AK had never been mentioned by Minister Noonan before November 2012, but 33AK is now routinely used by Minister Noonan to tell pesky TDs to “get lost” when they try to ask important questions about the banking sector which has to date cost us €70bn including the €6bn of state aid premiums that NAMA has paid to the banks when it acquired their loans.
A fortnight ago, Deputy Mattie McGrath – see top of this blogpost – asked seven separate parliamentary questions which boiled down to “were Bank of Ireland, Allied Irish Banks, Permanent TSB, Ulster Bank, Danske Bank, ACC Bank and KBC Bank in breach of their banking licences”. The “get lost” response from Minister Noonan was Section 33AK restricts the Central Bank in its ability “to detail specific elements of the licensing and supervision requirements of individual credit institutions”
Last Thursday in the Dail, it was used against Deputy Michael Moynihan who was asking about the pace of progress into investigations at what was Irish Nationwide Building Society. Topical stuff from the Cork Fianna Fail TD, given the recent High Court applications against five former INBS officers including Michael Fingleton and former chairman Michael Walsh, and also following the recent publication of the Tom Lyons/Richard Curran book on “Fingers” or Michael Fingleton and the manner in which INBS had been managed up to point where it ended up costing us a €5.4bn bailout. On Thursday last, the “get lost” to Deputy Moynihan was “I have been advised that an investigation is being conducted under the Central Bank’s Administrative Sanctions Procedure into historic lending practices at INBS. I am advised that for legal reasons, including the Central Bank’s confidentiality obligations pursuant to section 33AK of the Central Bank Act 1942, no further details can presently be disclosed.”
So, let’s get this straight: we now live in a Republic where the State has significant control and ownership of the banking sector which has cost us €70bn in bailouts, and yet we permit a piece of legislation to exist which prevents the finance minister being held to account on the practices of those banks. No doubt the mandarin discoverer of Section 33AK in the Department of Finance is regularly patted on the back, but for the sake of our Republic, shouldn’t this legislation be repealed?
Remember, we found out last year that Irish Bank Resolution Corporation was in breach of its banking licence but Section 33AK was used to obstruct us finding out any more with Minister Noonan saying in February 2013 “the Central Bank of Ireland has informed me that under Section 33AK of the Central Bank Act 1942, the Bank is restricted in its ability to disclose details of the supervision of individual credit institutions, and cannot therefore provide details of any breaches of the its licensing and supervision requirements”. It is now being used to obstruct our politicians in holding this Government to account in its oversight and management of the banking sector. What shenanigans are being hidden from citizens? And from potential investors including banks thinking of setting up shop in Ireland?
This is particularly galling given what just happened in Cyprus. One of the justifications for the confiscation of deposits is that the depositors should have known the poor condition of the banks and that in the future due diligence should be paramount for any depositor in the EU. Great, but if the banks will not let you see what the hell is going on, what good is this claptrap.