THE DEPARTMENT of Finance has said it sees no need for the Government to indemnify State appointees to the boards of financial institutions covered by the bank guarantee scheme against any claims for negligence or against any other court action.
Minister for Finance Brian Lenihan is preparing in the near future to nominate "directors representing the public interest" to the boards of AIB, Bank of Ireland, Anglo Irish Bank, Irish Life Permanent, the EBS, Irish Nationwide Building Society and Postbank.
The Government nominees are likely to include former European commissioner and former Fianna Fáil minister for finance Ray MacSharry and former Fine Gael leader and minister for finance Alan Dukes.
Frank Daly, a former chairman of the Revenue Commissioners, has also been mooted as a possible nominee.
Although senior sources in the business world believe the nominees might require indemnity against the cost of any legal action taken against them in respect of their work in the institutions, Mr Lenihan's department indicated yesterday that the provision of such indemnity was unlikely.
"The department does not foresee a need for this," a spokesman said. This follows an examination of the matter within the department, it is understood.
However, business sources believe it would be "entirely logical" to provide such indemnity to the State-appointed directors of the covered institutions as they could potentially face exposure to legal claims on two grounds.
First, they could be pursued in any class action by investors against an institution and its directors. Second, the Companies Acts empower the High Court to declare directors personally liable for the debts of a company if they are found to have behaved in any way inappropriately.
