According to documents released to The Irish Times under the Freedom of Information Act, the EIB President Philippe Maystadt warned Charlie McCreevy on July 3rd - almost two months ago - of the potential damage to the bank arising from the nomination of Hugh O'Flaherty.
However, Mr McCreevy responded by rejecting the idea that the nomination procedures should be changed, and called instead for a quick decision in favour of the O'Flaherty nomination.
Indeed as unease grew among the bank's directors and officials, the documents show that at one stage Mr McCreevy went over their heads to appeal to the politicians who he felt could secure the nomination for Mr O'Flaherty despite the opposition. On July 27th, he wrote to each of the EU's finance ministers extolling Mr O'Flaherty's virtues and calling for support for him.
Mr McCreevy's letter to his fellow EU ministers stated incorrectly that Mr O'Flaherty had been "endorsed by the Irish parliament". In fact, the Dail never endorsed, nor was it asked to endorse, Mr O'Flaherty. In May the Government successfully defeated a Fine Gael motion condemning the nomination by proposing an amendment simply noting his nomination. At the time Government sources said they had decided not to propose an amendment endorsing Mr O'Flaherty because of the strong opposition from within the smaller coalition party, the Progressive Democrats.
The released documents show that the concern within the bank in Luxembourg at the controversy was mirrored in Merrion Street by the determination of the Minister for Finance, Mr McCreevy, to push his nominee through the selection process.
The strength of the bank's concern was made clear in early July. Mr Philippe Mays tadt wrote to Mr McCreevy on July 3rd that the bank was concerned "at the publicity surrounding this candidature, at the extensive correspondence from Irish citizens and at the possible implications for the bank". He went on to say the bank's nomination procedures had now been called into question and risked being challenged "with potentially serious repercussions for the Bank, its organs and the candidate concerned".
While not explicitly stating opposition to the Government's intention to pursue the nomination of Mr O'Flaherty, Mr Maystadt said: "I am also conscious that the Governors in their June meeting again called for a new phase of deliberations on governance and improving the effectiveness of the Bank's decision-making bodies. I am sure that, no matter how we take this forward, we must not do so to the detriment of that very important undertaking."
In the context of the letter, the full text of which is printed on this page, Mr Maystadt was at least pointing out the possibility that to proceed with the O'Flaherty nomination could be to the detriment of the bank's wish to improve the effectiveness of its decision-making bodies. When Mr McCreevy eventually replied - on July 22nd, immediately after the Supreme Court ruled against Mr Denis Riordan's challenge to the nomination - he effectively dismissed these concerns and insisted the bank should ensure the early appointment of Mr O'Flaherty.
Before he sent this reply, however, Mr McCreevy sought and received a written opinion from the Attorney General on Mr Maystadt's letter of July 3rd. However, it could not be ascertained yesterday on what aspect of the letter he required Mr McDowell's opinion. The two-page document outlining the AG's view has been withheld by the Department, citing "legal professional privilege" as the reason for not releasing it.
When Mr McCreevy replied on July 22nd, he pointed out that as Mr Riordan had lost his Supreme Court appeal there were now no domestic legal or political impediments to the nomination of Mr O'Flaherty. The Department of Finance confirmed earlier this month that this letter repeated that Mr O'Flaherty was the Irish candidate and said: "I would appreciate therefore if the procedures to deal with this candidature could be advanced with a view to an early appointment."
HOWEVER, in the letter Mr McCreevy also stated opposition to any change in the procedures for the appointment of vice-presidents, effectively rejecting the concerns of the bank president over the issues raised by the O'Flaherty controversy. Noting that the bank was considering its procedures for vice-presidential appointments, Mr McCreevy said the current system "has been endorsed in the context of successive EU accession treaties, both by the EU member states and the governing organs of the bank. It has served us well and my firm conviction is that, in going forward, these arrangements should continue".
He added: "It goes without saying that the Irish authorities consider that these procedures must be followed for the current two vacancies on the Management Committee." The Government's determination to face down any opposition from within the bank was clear. This letter calling for a quick decision in favour of Mr O'Flaherty was circulated by Ireland's EIB director, the Second Secretary in the Department of Finance, Noel O'Gorman, to the bank's 24 other directors. These were the people who would now be asked to vote by post on whether they believed Mr O'Flaherty's name should be sent by them to the bank's governors for approval.
Mr McCreevy's political campaign to override the growing opposition among the bank's directors and senior executives continued with a letter to each of the other 14 EU economic and finance ministers four days later. This was the letter that stated that Mr O'Flaherty was "Ireland's official candidate" and said incorrectly that had been "endorsed by the Irish Parliament".
Mr McCreevy went on to point out that the court proceedings "taken by an individual citizen" which delayed the appointment process were over. He called on his colleagues to support Mr O'Flaherty. "He is an outstanding legal figure with extensive associated experience across the spectrum of commerce, taxation and administration. I am confident that Mr O'Flaherty will make a significant contribution to the overall management of the Bank."
Making no reference to the political controversy over the Sheedy case and Mr O'Flaherty's nomination, he said: "I would be grateful if you could give your support to the Irish Government's official candidate for this important post." He asked for a quick decision. The letter was faxed from the Department of Finance to the 14 other EU capitals on the afternoon of July 26th.
However, the directors were soon to be told by the bank that it was not as simple as that. On August 4th each director received news that Mr O'Flaherty had indeed been recommended by the Government. Accompanying this information, however, were details of the deluge of complaints received by the bank from the Irish public, press cuttings from Ireland detailing the extraordinary controversy and names of alternative candidates that had been put forward. The bank's secretariat had put forward this file of documentation.
This dossier circulated by the bank is also believed to have included letters sent by Mr O'Flaherty to the bank towards the end of July. These are understood to have been in response to a request for biographical and career details. However, they have not been released under the Freedom of Information Act on the grounds that they are personal in nature.
