THE RELEASE by the Department of Finance of two key letters written by Brian Lenihan – formally applying for a bailout, and explaining why Ireland had been forced to do so – helps to shed further light on the circumstances surrounding our economic malaise.
The letters are among three pieces of correspondence which had previously been withheld by the Department in the face of Freedom of Information (FOI) requests, but which have now been released after the documents were made public through other means.
The release of three letters means there are now five pieces of correspondence between Lenihan and his international colleagues which are now in the public domain. However, other crucial letters which shaped Ireland’s economic destiny remain unpublished.
So – what’s been released, what do we know, and what’s left to come out?
Below is a list of 12 documents sent between Lenihan and the European Commission, the European Central Bank, the IMF, and the British Treasury in November 2010 – the month that the bailout happened.
The list is based on a schedule of records compiled by the Department of Finance in response to an FOI request by this website last year. (That original schedule of records can be seen here.)
Four pages. Refused from FOI requests because Irish law exempts any communications between the State and “any international organisation of states”, including an institution or body of the EU.
Three pages. The letter, which is only tangentially related to the bailout, is the ECB’s legal opinion on a draft version of laws to extend the bank guarantee scheme. The final version of that law was signed by Lenihan on November 19.
Two pages. This letter was refused on the same basis as the IMF fax mentioned above, and also because: “This record contains information, access to which could reasonable be expected to have a serious adverse effect on the financial interests of the State or on the ability of the Government to manage the national economy”.
The offer responsible for making the decision on whether to release this letter decided it was “not in the public interest to release this record”.
Two pages. This letter was refused for the same reasons as the IMF fax – that the communication was between Ireland and the EU or one of its subsidiaries.
Four pages. This document is totally unrelated to the bailout; Lenihan was sent a copy of the message as a courtesy. Ironically enough, the message was actually sent to the Central Bank – inviting it to a course on ‘identifying systemic risk’. This was, evidently, three days after the IMF started discussing a possible programme with Lenihan.
This is where accounts of the timeline begin to differ. Both Brian Lenihan and a former advisor, Alan Aherne, say Ireland received a letter from Trichet the Friday before a meeting of EU finance ministers – one which began to pressure Ireland into seeking a bailout. The EU finance ministers met on Wednesday 17 and Thursday 18 of November.
The Irish Times, reporting on this sequence of correspondence a few weeks ago, said there was a phone call between the two on the 12th – but that it appeared “likely that an email or fax” had first been sent, prompting Lenihan to call Trichet in the first place.
The schedule of communications compiled by the Department of Finance and sent to us last year does not mention any communication – of any sort – between the two on November 12. While phone records would not have been included in this schedule, an email or fax would have been.
Irrespective of this, the two-page letter of November 18 was likely not intimately related to the bailout: it would not be uncommon for ECB presidents to send circulars to Eurozone finance ministers immediately after (or even during) a summit.
The letter was nonetheless withheld for the reasons mentioned above – that it is correspondence between Ireland and an international body, and is therefore exempt.
This is the ‘big one’ – the letter where Trichet is said to have threatened to pull ECB funding from Irish banks if Ireland did not enter a bailout. Unfortunately, it’s also the one guarded with the most secrecy.
Such is the level of secrecy, in fact, that the schedule of documents from the Department of Finance did not even say how long the letter was.
The Department of Finance withheld it for three reasons:
- As with the other documents, it’s a letter between Ireland and an international body of states, and is legally exempt;
- The records were received “in confidence and on the understanding that it would be treated as confidential”. There is a public interest test applied in this case, but it was decided that it was “not in the public interest” to release the letter;
- As with the letter on November 4, releasing the letter could have a serious adverse effect on Ireland’s ability to govern and manage its financial affairs. It was therefore, again, decided that it was not in the public interest to release the records.
Gavin Sheridan of TheStory.ie separately asked the ECB to release this letter; in a response issued in February, Mario Draghi – Trichet’s successor as ECB president – refused an appeal to release it.
“The ECB must be in a position to convey pertinent and candid messages to European and national authorities of the euro area in the manner judged to be the most effective to serve the public interest,” Draghi himself wrote.
“Confidential communication must be possible and should not be undermined by the prospect of disclosure.”
This is Lenihan’s response to Trichet’s closely-guarded missive, and had originally been withheld by the Department of Finance (but subsequently released and received by TheJournal.ie today).
The letter was originally withdrawn solely on the basis that it was communication with an international body, and therefore legally exempt from FOI law.
However, FOI law provides that information which is already in the public domain can be released anyway. Given that Sheridan has now been able to get the ECB to release this letter, the Department of Finance has retrospectively approved TheJournal.ie‘s request and released it.
In the letter, Lenihan focuses on the problems that the Irish banking sector has caused – and, for the first time, tells Trichet that Ireland’s going to apply for a bailout.
The single, one-page letter – again, originally withheld for the usual reasons by the Department, but retrospectively released now – in which Lenihan applies for a bailout.
“The Irish Authorities will cooperate fully in the preparation of the joint EU-IMF programme of assistance to the Irish state that will now be required to be developed.”
There are technically two letters involved here.
The first is a two-page letter from Lenihan to his European counterparts, formally asking that Ireland be excused from funding future bailouts to Greece or anyone else who gets money from the European Financial Stability Facility. This was provided for in EFSF rules, and was quickly approved.
The second is a one-page cover letter, where Lenihan summarises his application for Rehn.
The first letter remains withheld for the usual reasons; the second had also been withheld until this week’s developments.
This is a two-page letter in which Osborne, Britain’s Chancellor of the Exchequer, discusses proposals to increase financial stability.
It was exempt from release for two reasons: firstly, because it “contains information communicated by a person acting on behalf of another government”. This is therefore legally barred from release.
The second reason for it being withheld is that it, like earlier examples, contains information which – if made public – could “have a serious adverse effect on the financial interests of the State”.
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