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The Central Bank of Ireland issued the money. PA

'Serious concern' as Central Bank issues €738m to government in excess of funds available

The incident occurred following spending oversight from the Department of Finance and the Central Bank.

THE CENTRAL BANK issued an unauthorised payment to the Department of Finance that was €738 million over the funds available to it in October of this year.

That is according to a report from the Office of the Comptroller and Auditor General (C&AG), which has labelled the incident as “a matter of serious concern”.

The C&AG grants the Government approval to withdraw “credit” - the maximum amount  of money that may be drawn by the Minister of Finance for a Government-approved purpose at a specific period of time – from the Central Fund.

The Central Fund receives most of the State’s revenues and is the primary source of  State spending.

The account of the Central Fund is held at the Central Bank of Ireland.

On 28 October, the Department of Finance submitted two payment orders to the Central Bank totaling in excess of €2.5 billion, to fund the delivery of “supply services”. These are defined by the C&AG as the “day-to-day services funded from the votes that are managed by central government departments and offices”.

The money was released to the Department on the same day, despite the amount approved exceeding the remaining credit sum by €738,119,600.

The Central Bank and the Department both failed to identify the excess release of funds until after the payment had gone through.

The C&AG of the incident on the following business day, 1 November 2022, the report says.

“Serious concern”

The money in the account of the Central Fund belongs to the State, the report notes, and the Minister for Finance is legally entitled to apply to withdraw funds after seeking approval from the C&AG. 

It also highlights that the Department could have applied earlier for additional credit prior to submitting the payment orders, but failed to do so.

The incident has been condemned by the C&AG.

The report states : “It is a matter of serious concern that the Department of Finance issued a payment request to the Central Bank, for which there was insufficient credit in place.

“It is also a matter of serious concern that the Central Bank of Ireland released significant funds without the necessary authorisation being in place,” it added, before saying that there is a need to strengthen controls within the credit-issuing process.

In a response to the C&AG, the Department of Finance says it carried out its own investigation into the incident.

It found that the Department’s failure to seek a credit from the C&AG earlier in the year and to verify that there was sufficient credit available before requesting the funds were to blame for the occurrence.

It stated that a number of changes have been introduced within the Department to prevent a re-occurrence, including a warning system that will notify both the bank and the Department when the available credit falls below a designated level – currently €5 billion.

The Central Bank said that its existing credit-issuing processes “were not robust enough to prevent this incident from occurring”. 

It added that the bank is engaging with the Department to implement additional controls in place in advance of payments, including a “four eyes” approach to check the amount of credits available to the Department before payments are issued.  

The report did not specify when these changes will be introduced.

The C&AG is legally obliged to present reports arising from incidents such as this to Government.

The document is due to go before the Dáil today.

“Breach of control”

Meanwhile, the Committee of Public Accounts (PAC) – the body responsible for scrutinising departmental and other governmental accounts in the Dáil – is to write to the Department of Finance seeking further explanation as to how the money was drawn down without authorisation. 

In a statement today, committee and chairperson and Sinn Féin TD Brian Stanley described the incident as a “serious breach of control”.

 He said: “The law requires the Minister, in advance, to seek independent assurance of the appropriateness of withdrawals and this did not happen. 

“The PAC needs to know how this happened, why it happened and who is responsible for the breach.

He added: “This matter has undermined the financial prudency of the Department of Finance and the Central Bank with regards to exchequer funds and we need to restore trust in our processes.

“The PAC also needs the department and the Central Bank to detail exactly what changes are being put in place to ensure that no such breach occurs again.”

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