Irish Banks Back to Haunt Kenny as Army Story Puzzles a Nation

  • Irish PM asked to clarify comments over army guards for banks
  • PM says taskforce discussed euro break up in general

Ireland’s prime minister has got voters scratching their heads about just how close the country’s banks came to calamity, army protection and capital controls.

Enda Kenny sparked 10 days of confusion after his comments last week that, during the height of the financial crisis, Central Bank Governor Patrick Honohan told him to be ready to introduce capital controls and deploy the army to guard the banks.

Enda Kenny
Enda Kenny
Photographer: Simon Dawson/Bloomberg

Opposition politicians seized on the remarks, pointing out that the premier hadn’t mentioned the incident in his evidence to a parliamentary inquiry into the nation’s banking collapse. With national elections due within with months, and few details of the episode public, Kenny’s opponents demanded more clarity about the episode.

“This is a government that has fallen for its own spin,” said Pearse Doherty, Sinn Fein’s finance spokesman, in a statement. “The banking inquiry must have complete clarity on whether Ireland came within 48 hours of introducing capital controls as Enda Kenny claimed.”

Irish financial shares index
Irish financial shares index

Seeking to still the controversy, Kenny said while his administration had set up a task force to consider topics such as security in the event of the euro-area splintering, he had no “specific briefing” from the central bank chief.

“When we discussed the possibility of the break-up of the euro, the task force discussed in general the contingencies,” Kenny said in remarks broadcast by RTE on Thursday. “There were no detailed discussions about what might happen.”

Honohan Speaks

Late in Dublin on Thursday, Honohan broke his silence on the episode. He said that while he didn’t want to discuss in detail his contacts with the prime minister, the clarification from Kenny had “put this story to bed really.”

Patrick Honohan
Patrick Honohan
Photographer: Brian Lawless/PA Wire via AP

“I have no doubt that he had officials in other departments talking about contingencies of that type, that’s not the territory the central bank was involved in,” Honohan told reporters in Dublin. “I think that’s clear now from what he’s saying.”

Government spokesman Feargal Purcell said that the prime minister, known as the Taoiseach in Ireland, and the central bank governor “played different, but complementary roles in managing Ireland out of crisis over the last four years.”

Conversations

The central bank, finance ministry and prime minister’s office took part in conversations covering contingencies related to the potential collapse of the euro region, he said.

“Good planning would demand it, ” said Purcell in response to questions. “The Taoiseach has never claimed these conversations involved just him and the governor.”

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