Central Bank paid €53m in legal, accounting fees during crisis

Fees paid to seven legal firms between 2008 and 2013 related to banking crisis

The Central Bank of Ireland paid out almost €53 million in fees between 2008 and 2013 to seven legal and accounting firms for work related to the banking crisis, new figures reveal.

This included around €20.5 million last year, most of which was related to work on the balance sheet assessments (BSA) conducted on AIB, Bank of Ireland and Permanent TSB. These tests were a pre-condition of Ireland’s exit from the EU-IMF bailout programme.

The data shows that no tenders were used to hire firms for almost half of the fees paid out.

Parliamentary questions

The figures emerge in a response by the Central Bank to parliamentary questions asked by Sinn Féin’s finance spokesman Pearse Doherty.

It shows that Big Four accounting group EY, the auditor to Anglo Irish Bank before its collapse, was the biggest earner, with fees of between €16 million and €16.5 million.

The Central Bank’s data shows that EY received €10 million to €10.5 million last year, having been involved in the BSA tests on state-owned AIB and Permanent TSB. It earned up to €500,000 each year between 2008 and 2010 and between €2 million and €2.5 million a year in 2011 and 2012.

The next highest earner was KPMG, which was paid between €13.5 and €14 million by the regulator since 2008. This included between €6.5 million and €7 million for BSA work on Bank of Ireland last year.

These fees are not connected to its work as liquidator of Irish Bank Resolution Corporation, where it was appointed by the Government in February 2013 to wind up the former Anglo Irish Bank and Irish Nationwide.

Deloitte, another Big Four accounting firm, has been paid €4 million to €4.5 million. Its best year was 2011 when it earned €2.5 million and €3 million from the Central Bank, relation to the PCAR capital stress tests.

Grant Thornton, another accounting firm, was paid between €4 million and €4.5 million by the Central Bank, with roughly half of this in 2011.

PwC was the only one of the seven firms not to earn any fees from the Central Bank last year. However, it has received between €6.5 million and €7 million over the period for various work conducted for the regulator. Half of this was earned in 2008, when the banking sector collapsed.

Of the law firms, McCann Fitzgerald received between €6 million and €6.5 million whileArthur Cox was paid between €1 million and €1.5 million.

The Central Bank’s figures show that €13 million was paid out to firms without tenders or a competitive process being run as it was “deemed necessary in exceptional, financial crisis-related circumstances”, including the “urgent examination” of the banks.

No tenders

Separately, no tenders were required in relation to €14.5 million of the sums paid. The Central Bank said this relates primarily to the procurement of legal services and professional placement fees.

“Such services are subject to minimal procurement rules, and therefore there is no requirement to follow a proscribed procurement procedure when procuring such services,” the regulator told Mr Doherty.

Roughly half the fees paid out, €25.2 million, was for work that was publicly tendered. The Central Bank awarded 15 contracts last year at a cost of €20.3 million. Of this, €16.2 million was via tenders.

Thirty-eight contracts were awarded by the Central Bank between 2011 and 2013.

Details of the number of contracts awarded in the preceding three years are not available, as a central contracts register was not established until 2011.