Committee Reports > List of Committees > Dáil > 1973 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1969 - 1970

APPENDIX 48.

FOREIGN BORROWINGS UNDER THE APPROPRIATION ACT, 1965, SECTION 4 AS AMENDED BY THE APPROPRIATION ACT, 1969, SECTION 2.

100,000,000 Deutschemark Bonds

$15,000,000 9% Bonds 1985

Dear Chairman

At last Thursday’s meeting no official record was made of my comments on the opinions expressed by the Attorney General’s Office regarding the matters raised on Paragraph 10 of my Report. I feel it desirable, therefore, to summarise these comments for inclusion in the official record of the proceedings.

1. The claim that these foreign borrowings were excepted from the requirements of Article 11 of the Constitution by the relevant legislation

At the time these borrowings were made the Central Fund (Permanent Provisions) Act, 1965, gave general authority to the Minister for Finance to borrow to meet issues from the Central Fund. The relevant section of the Act is section 7 and subsection (3) of that section reads as follows—

“Moneys borrowed under this section shall be placed to the credit of the account of the Exchequer and shall form part of the Central Fund and be available in any manner in which the Fund is available”.

Moreover section 4 of the Appropriation Act, 1965 as amended by section 2 of the Appropriation Act, 1969—the statutory provision which authorised borrowing in a currency other than the currency of the State—reads as follows:—

“The amount to be paid into the Exchequer in respect of any borrowing effected under this section shall be the amount of currency of the State obtained when the sum borrowed is converted into currency of the State.”

Clearly these borrowings were made for the Exchequer Account and did eventually find their way into that Account. It is not accepted, therefore, that they are an exception to the requirements of Article 11 of the Constitution such as is provided for by the provisions of that Article in the phrase “subject to such exception as may be provided by law”. Such exceptions are moneys which never find their way into the Exchequer Account and include—

(1) Appropriations in Aid and

(2) Drawbacks, rebates, repayments and allowances of Customs and Excise duties.

The use of these moneys without being paid into the Exchequer is authorised by legislation (Appropriations in Aid, by section 2 (2) of the Public Accounts and Charges Act, 1891 and Customs and Excise Rebates, etc. by section 10 of the Exchequer and Audit Departments Act 1866).

As the borrowings in question cannot be regarded as exceptions to the requirements of Article 11 of the Constitution they should have been paid into the Exchequer forthwith. In so far as section 4 of the Appropriation Act 1965, as amended, purports to authorise the temporary exclusion of these borrowings from the Exchequer I regard it as unconstitutional.

2. The control on behalf of the State of all disbursements

Foreign borrowings under the Appropriation Act, 1965, Section 4 as amended by the Appropriation Act, 1969, section 2

Article 33 of the Constitution indicates the duties of the Comptroller and Auditor General as—

(1) to control on behalf of the State all disbursements, and

(2) to audit all accounts

of moneys administered by or under the authority of the Oireachtas.

These are separate duties and we are concerned in the present matter only with (1). The procedures to enable the Comptroller and Auditor General to control disbursements are authorised by Articles 13 and 15 of the Exchequer and Audit Departments Act 1866 and provide that he shall grant credits from time to time on the Exchequer Account to the Minister for Finance on the latter’s requisitions authorising such credits. Before granting a credit the Comptroller and Auditor General is required to satisfy himself that the moneys sought are required for purposes approved by Parliament and are within the financial limits authorised by Parliament. The Comptroller and Auditor General cannot draw on the Exchequer Account nor can the Minister for Finance do so without first obtaining a credit from the Comptroller and Auditor General. If moneys raised for the Exchequer Account are not paid forthwith into that account but are deposited elsewhere they are removed from the control of the Comptroller and Auditor General while they remain so deposited. This position obtained in the case of the two loans we are here considering during the periods they were deposited outside the State. The fact that no disbursements were made out of them during these periods is no justification for their removal from the control required by Article 33 of the Constitution.

If Parliament so wished it could introduce amending legislation to authorise the deposit of some Exchequer moneys outside the State. It should not be very difficult to draw up procedures to ensure that any Exchequer moneys so deposited would remain subject to the control of the Comptroller and Auditor General as required by Article 33 of the Constitution.

3. Inclusion in the annual finance accounts of a statement of any sums standing placed on deposit outside the State at the close of the financial year

Subsection 2 (c) of the Appropriation Act, 1969 reads as follows—

“Annual finance accounts under section 2 of the Public Revenue and Consolidated Fund Charges Act, 1854, shall include a statement of any sums standing placed on deposit under this subsection at the close of the financial year.”

The $15,000,000, 9% loan raised in March 1970 was on deposit outside the State at 31 March 1970 and the Finance Accounts for 1969/70 should accordingly have included a statement to that effect. While this loan is listed in a number of accounts relating to National Debt and Capital Assets nowhere is it stated in these accounts that it stood placed on deposit outside the State at 31 March 1970 as required by section 4 of the Appropriation Act, 1965 as amended. Hence I hold the view that the requirements of that section were not complied with on this occasion.

I am forwarding a copy of this letter to Mr. Murray, Secretary of the Department of Finance, for his information and for the information of the Minister for Finance.

Comptroller and Auditor General.

28 July 1971.

SURGEON P. HOGAN, T.D.,

Chairman,

Committee of Public Accounts,

Leinster House.