The reaction of most people today to the news that the Garda has gone in to search the offices of Anglo Irish Bank is that it is about time. I do not want to say any more on the issue for the reasons that have been stated.

The priority we all have to address, one on which we all agree, is the necessity and imperative of restoring confidence in the Irish banking and financial system. We must also be honest, however, about what is eroding the confidence in Irish banks and the banking system. A contributing factor has been the incremental release of information, in particular about what went on in Anglo Irish Bank. We also have deficiencies in the regulatory set-up and the political supervision of this set-up by Government. We know about the back-to-back arrangement between Anglo Irish Bank and Irish Life & Permanent, on which PricewaterhouseCoopers reported in October. The Minister for Finance did not read the report at the time and did not find out about it until January when the matter was drawn to his attention. When he found out about the arrangement he did nothing until 10 October when it became public knowledge, at which point we had a flurry of activity with the board being called in, executives resigning and so on.

At the weekend, a most extraordinary report, one I find hard to believe, was published in The Sunday Tribune. The newspaper has indicated it has seen transcripts to confirm its report that the financial director of Anglo Irish Bank, Mr. Willie McAteer, told the head of our Financial Regulatory body, Mr. Neary, at a meeting in September that the bank would be “managing” its balance sheet, in other words, cooking its books. According to The Sunday Tribune, Mr. Neary responded with the words, “Fair play to you, Willie.”

The Sunday Tribune report also states that staff in the Office of the Financial Regulator were informed in a telephone call from officials of Anglo Irish Bank in October, made after the guarantee was put in place, that the bank was manipulating its balance sheet and the balance sheet did not represent a real number. The newspaper also reports that a senior civil servant, who is described as working closely with the Minister for Finance, Deputy Brian Lenihan, assured Irish Life & Permanent that he understood why it was necessary to carry out the back-to-back transactions and that there was no need for concern over these arrangements. Has the Taoiseach checked if these stories are true? Has he asked the Minister for Finance about them? What can he tell the House about them?

I agree with the Taoiseach that we have to restore confidence in Irish banks. Part of the process of restoring confidence in Irish banks, particularly Anglo Irish Bank, is to identify if wrongdoing took place and, if so, to have it dealt with. Another part of the process is to restore some confidence in the regulation of Irish banks. I would like to know if the story which appeared on Sunday is accurate and what steps the Taoiseach or Minister for Finance have taken to check if it is true.

I will make a general point and then answer the specific questions raised. As everyone knows, a thorough investigation is taking place in Anglo Irish Bank and certain matters which have come to the attention of the authorities are being investigated. People will be aware, therefore, that the meeting referred to in The Sunday Tribune article did not take place until 22 January 2009, that is, after the Government’s decision on the nationalisation of Anglo Irish Bank. It seems from the newspaper accounts that this is an allegation based on a newspaper’s interpretation of a document that is at least a third hand account of impressions of persons who were supposed to have attended the meeting in question.

The Department of Finance has no role in approving transactions of this kind between banks, much less four months after the fact. When the Department became aware in October, as a result of the initial PwC report on Anglo Irish Bank, that such transactions did exist the matter was immediately drawn to the attention of the Financial Regulator. The simple point I am making is that there are interested persons seeking retrospective approval on matters which were not given the imprimatur by the Department of Finance in any shape or form. I am satisfied of that, knowing the official concerned. Therefore, any effort to deal with this matter other than through the proper investigative channels — based on surmise, interpretation, recollection, or the post-dated memo of 22 January which mentioned something that was alleged to have happened in September — will not be useful. I did not attend the meeting in question; nor do I know of anybody who attended.

Let the investigators deal with the matter, because that is the only way we will get to the truth. It is important that any information that becomes available in the public domain be seen in that context. The only way in which this House can proceed — indeed, the only way in which the law can be pursued — is through the investigative arrangements set down by Acts of the Oireachtas. Every aspect of this matter will be investigated by the people concerned, independently and statutorily, and the true facts will be brought out. I cannot add to that.

I will try to be helpful. These questions are in the national interest. As I do not want to be adversarial about this, I invite the Taoiseach, with due respect to the answer he has given, to try to answer my questions a second time. The issue in respect of the senior civil servant at the Department of Finance is not whether or not the Department of Finance gave approval to the arrangements between Anglo Irish Bank and Irish Life & Permanent. It is accepted that it did not approve or give, as the Taoiseach said, an imprimatur to it. The question is whether it gave the nod to it. That is what I want the Taoiseach to address. That is important.

It is a conspiracy theory.

We have a duty to ask questions here. I will try to ask the questions——

He did an investigation.

——in as responsible and coherent a way as I can. These are questions I did not invent.

Like last week.

They have been raised in reports that are in the public domain. There is a responsibility on the Taoiseach or the Minister for Finance to address them when they are asked, and I am inviting them to do so.

My other question is about the Financial Regulator. We know Mr. Neary is gone. However, has the Taoiseach made any inquiries about the regulator being told in September — and, apparently, his office being told again in October — that Anglo Irish Bank was, in effect, managing its balance sheet, and that it was given the nod for that? This is a case not of light regulation but of blind-eye regulation. The reputation of the country and of our banks, and all the economic consequences that flow from that, are at stake.

What went on in Anglo Irish Bank must be investigated. The Labour Party has been seeking this for some time and I am glad to see progress being made on it. We have been seeking to have an inspector appointed, for example. However, there is also the issue of the reputation of our regulatory regime and the political supervision of that regime. These reports were in a Sunday newspaper. I do not believe everything I read in the newspapers, but I do think——

Even the polls?

The bits they put in themselves.

There is nervous laughter over there.

The Taoiseach should respond in the interest of making sure the country's reputation is not further damaged.

I take the point that has been made. These transactions, as I said, took place at the end of September last year. The meeting referred to in the article in The Sunday Tribune did not take place until 22 January 2009. I am simply making the point that the Department of Finance official concerned had not been briefed on any discussion that may have taken place with the Financial Regulator on the matter and was not in a position to comment on that discussion, and the official concerned gave no imprimatur whatsoever to those transactions.

The position of the Financial Regulator is that it did not give authority to a transaction that would constitute a wrongdoing or would not be in compliance with the Central Bank Acts or the companies legislation. Regardless of what motivation there might be for putting across such a view — it should be kept in mind that this was four months after the fact in a memo dated after the decision on nationalisation of the bank — in respect of people looking back to see whether they could find retrospective approval for any such thing, the investigator is the only person who can come to a conclusion on the matter. The authorities would not agree with the interpretation being put on the reference to the memo dated 22 January, which is an important date when one takes into account that we are now looking back in the aftermath of a due diligence process that had taken place prior to that date and the decision taken by Government to nationalise the bank in the interest of maintaining financial stability in the country and of making sure that a bank of systemic importance did not fail. I am putting it no further than that.

I am as constrained in the matter as Deputy Gilmore but I am simply making those points as they are the reason we should be cautious in accepting the veracity of any such interpretations, given the interests of various parties, if I am making myself clear. Furthermore, I regard the official concerned, whom I know and with whom I have worked in the past, as a person of the highest integrity. I have no reason to believe that the Office of the Financial Regulator was not also seeking to discharge its duties conscientiously.

Did the Taoiseach ask whether it was true?