|
 Kevin Cardiff, the secretary general of the Department of Finance in
November 2010, did not specify whether the officials were from the
European Central Bank or European Union, the two bodies that wanted
a bailout to ease wider market concerns.
"It was though clearly inappropriate, that at the outset, at the
point when we were trying to make decisions, that backdoor briefings
of the media should be used to undermine our position on the market
so as to add to our pressure," Cardiff said.
"Democratic systems should not rely on undermining reputation and
distributing misinformation via anonymous briefings," he told a
parliamentary inquiry into the banking crisis that forced Ireland
into a 64 billion euro bailout.
The Irish government was "pushed quite hard" by the European Central
Bank into accepting an EU-IMF bailout in 2010 and was prevented from
burning senior bank bondholders, he said.
The ECB denies any undue pressure was put on Ireland to take the
bailout, needed after the collapse of the country's banking system,
and says its perilous finances forced it to seek aid.
"At the moment we entered it we were pushed quite hard," Cardiff
said.
A letter from ECB head Jean Claude Trichet told Ireland in November
2010 that it would not extend further emergency funding to the
country's banks if Dublin did not sign up to a bailout. Ireland
signed the deal two days later.
The government was initially supported by the head of the
International Monetary Fund Dominique Strauss-Kahn in seeking to
impose burden sharing on senior bank bondholders in failed Irish
banks, Cardiff said.
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But Strauss-Kahn was overruled in a conference call with EU and ECB
officials, Cardiff said, citing information he said was not first
hand, but that he believed to be credible.
There was "a strong negative reaction from the ECB and others and
that moreover the EU-IMF program would not go ahead if senior
bondholder burden sharing was contemplated", he said.
"Of course it was formally Ireland's decision not to burn
bondholders, but it was one of those decisions without much option."
Greece, facing a possible IMF default on July 1, is negotiating with
the ECB and European Commission on an aid-for-reforms deal. Both
institutions have rejected accusations that they are using
inappropriate pressure to convince the Greek government to accept
the new bailout funds.
(Editing by Louise Ireland)
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