The Central Bank did not want Department of Finance officials attending meetings on financial supervision during an International Monetary Fund (IMF) visit earlier this year, the Irish Independent has learned.
Citing legal “confidentiality obligations”, Central Bank Governor Philip Lane argued against the attendance by Departmental officials at as many as 17 meetings related largely to banking and insurance supervision.
One of the most senior officials in Michael Noonan’s department sought to persuade Professor Lane to allow the Department of Finance staff access, stating the exclusion should be “clearly attributable to specific legal requirements”.
Governor Lane argued the presence of the officials “would prevent a full and complete response” to the topics being discussed, and may “bring into question the Central Bank’s independence”. Instead, he offered to have the Finance officials provided with briefings both before and after the meetings.
The meetings were organised as part of one of the IMF’s Financial Sector Assessment Programme (FSAP) visits to Ireland, which took place in March.
The FSAP assessment was the first to take place since the onset of the crisis, and focused on the conditions of, and prospects for, Ireland’s financial system.
There were a number of visits between September last year and March, and the findings informed the IMF’s Financial Assessment Stability Report on Ireland, which was published last week.
In a March 4 letter to Ann Nolan, second secretary general at the Department of Finance, Governor Lane said the Central Bank had co-operated fully with the Department and other state bodies throughout the FSAP process, and that Finance officials had attended meetings during earlier visits.
But he added: “The Central Bank has reviewed the 68 meetings the Department of Finance officials indicated they would like to attend during the current FSAP mission,” the Governor wrote in his letter, obtained by the Irish Independent under Freedom of Information.
“Seventeen of these meetings relate to discussions on areas (primarily the supervision of regulated institutions), where due to these confidentiality obligations, Department of Finance officials’ attendance would prevent a full and complete response on the topics in question, restrict the Central Bank’s ability to discuss evidence of practice and may also bring into question the Central Bank’s independence.”
Two days earlier, Ms Nolan wrote to Governor Lane referring to email correspondence between officials in her department, and the Central Bank, relating to the FSAP meetings.
“I am firmly of the view that department officials’ attendance is important in terms of fulfilling our oversight role in relation to the State’s economic, fiscal and financial stability, particularly in light of the findings and recommendations emerging from the recently published Report of the Oireachtas Joint Committee of Inquiry into the Banking Crisis,” Ms Nolan said.
“A key lesson from the banking crisis is the need for full co-operation between the Department of Finance, the Central Bank and other State bodies.”
Ms Nolan said the “exclusion of Department officials” should be an “exceptional arrangement” and one which is “clearly attributable to specific legal requirements”.
In his response, Governor Lane said that under law, the Central Bank cannot disclose confidential information unless there is a “gateway” to disclose such information to certain persons under prescribed circumstances.
He cited Section 33AK, which sets out the secrecy provisions of the Central Bank Acts, and the Supervisory EU Legal Acts.
“However, there is no ‘gateway’ to the Department of Finance in this situation,” he said.
A spokesman for the Department of Finance confirmed that its officials did not attend the 17 meetings. However, he said the Central Bank provided “a full and comprehensive brief” before and after each meeting,
“In relation to the meetings were the Department of Finance wasn’t involved, and even if the issues didn’t even impact on the Department of Finance, a full briefing was given before and afterwards,” the spokesman said. “They [DOF officials] were happy with that and the outcomes.”
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