Albert Dolan Confronts NTMA Over €5M Scam and Debt Risk

I guess at the outset I just want to firstly thank you for being here and I'm very conscious of the work that you do and the level of complexity that it involves. Managing the country's national debt, ISIF and the State Claims Agency are all three really important, really difficult jobs and so you know I just want to say I do really appreciate the work you're doing there because it's a really really important job and it's probably it's behind the scenes, it's not seen you know and it probably doesn't get celebrated enough for the serious importance that it has and with that I want to start by talking about the national debt. So correct me if I'm wrong it's currently sitting at approximately 230 billion. So obviously the biggest risk facing our country in terms of unexpected expenditure is the management of interest rate risk. So could you tell me now what is the debt profile that you're currently carrying, how much of the debt is on a fixed interest rate, a floating rate and could you maybe explain to me what would happen if rates went up 1% or 2% and how much would that cost the country and how are you how much of a runway do you have in front of you in terms of I understand you did really well I have to say this you did very well to reduce the the debt cost from 8 billion down to 3.4 and that's fantastic because that allows us to go and spend money on public services for people but can I ask how much runway does the NTMA have here? Well firstly thank you Deputy for your comments and try and give it you know well I as a debt manager not surprisingly want to say that we never want to become complacent but there is some good news in the statistics and then there's the cautionary as a tale so the good news is that the debt Ireland's debt has fallen in the last few years or from a debt ratio point of view we're in good shape so to give you an example Ireland went from low 20% debt GDP to 120% to top the crisis it's back in the mid 30s but we all know GDP flatters Ireland so you need to use GNI star that went to 163% at the top of the crisis back into 60% so from a debt ratio there's many countries in Europe would like to be in our position that's number one number two in terms of exposure to interest rates the good news is we you can take it the entire portfolio is effectively fixed okay so like a fixed rate mortgage because when we borrow we borrow fixed and how long how long are those notes so the average life of our debt is about ten years it's one of the longest in Europe because it's the average yesterday we did we tapped at an old 20-year bond 17 years the green bond we raised two billion and but we issued that 30-year bonds last year during the low rates we issued our first 30-year bond in 2015 we went to the market again in COVID when rates were even lower for a 30-year we issued some hundred-year notes in the background probably over two billion that people don't see when people asked in those times for a hundred or two hundred million so we the good news is it's fixed if you borrow short-term markets for short-term cash buffers etc that's more repricing more often but predominantly we're not even doing that at all because we took a cautionary approach so the majority that's fixed what does that mean and tend to come to your example it means that our interest bill continues line and it's only going to go gradually and we've said this in many years but by the time you come to 2030s so we're not unless the state was to borrow a huge amount of money at a high rate to handle some sort of a crisis yeah we're not going to see the national debt cost and the service cost of that rising anytime soon yeah what we've bought is time okay you see a gradual increase so for example you would the average rate on the debt at the moment is 1.5 percent and can I ask Frank from your perspective do you believe we've to we still have too much debt or are you happy with the level of debt that's currently there well look obviously the Roxas decides what level of debt in terms of running the budget surplus or budget deficit so there's two messages one is we're a very good position we've bought the state side time during Kovacs and we were in a better position the state was able to borrow to respond but I would say to you it buys time so the rates will gradually increase so even though we borrowed a 3.64 percent yesterday that's the highest we've borrowed for that amount of money since 2013 okay right so that's a reminder rates are going up but that will only move the interest dial a little bit over the next while because we have 200 and some billion so that's very important okay I want to move on to the next issue really and to be honest this really did shock me the five million euro payment that was made by the NTMA to somebody who obviously was a potential investment recipient can you explain to me have you established the facts of what happened there yes okay can you share any of the detail with us I will share some of the detail not withstanding obviously chair criminal investigation our efforts to recovery plus we don't give tread actors every step of our process but I'll explain obviously on this occasion the standards of our controls didn't meet and the payment was released what happened the additional information probably from the last time is that our investing company had a breach of their email systems they had a breach there were compromises kind of called business email compromise so that allowed a track actor to be in that email for a period of time and then send from a valid email to us a valid instruction for capital and at each step of our process as people ask questions naturally and they have enough information how did you uncovered that the money had gone to the wrong person and well here's another part of which is very important part I think is the people involved in the payment process and one of the employees I don't want to identify because we all know who are in the payments and in the eyes of a but it was the people involved in it who discovered the next day in conversation that the capital hadn't gone to the investing company and the important thing is the minute they saw that they told us because if they didn't our ability to go and follow the money because you can imagine how fast money got moved how do you even go about recovering 50% of the money I know you've recovered 2.5 million and you're hoping to recover more but this this is a really scary incident because you know okay while this was 5 million which is a huge sum of money the NTMA and ISIF and other entities are dealing in much bigger sums and what would happen if something bigger was to go wrong here and I guess are you confident now that something like this won't happen again and I guess my concern when I heard this story was it had to be an inside job somebody had to have known like you know how did they intercept this I you know I'd be curious as to how the hell this happened so can I ask you are you confident that something like this won't happen again and how did you recover the 2.5 and how do you plan to recover the next 2.5 firstly look in terms of being confidence but anything in life and given a guarantee that nothing could ever happen again that's impossible what I can say to you is our response to it and the controls we have and the controls we've implemented but we've got to stay vigilant so that's that's on the first piece and the ability to recover staff spotting the mistake and saying there's a problem here etc that was sufficient obviously you'd respect that I can't get into a lot of detail on recovery but what we did do is we make a lot of payments around the world we've a lot of counterparts we've a lot of people we can can I I'm gonna finish on this topic can you just confirm to me that this was a case that the NTMA got scammed and it wasn't that the NTMA was complicit I was going to come yeah absolutely so it won't surprise anybody here that when we got to Lloyd in to look at what the facts of what happened and the controls and process we have that they must check not that we suspected it but they must check forensically was anybody in the NTMA colluded or did something different or whatever so I can guarantee I can categorically say that is not the case and I think just on that that is vitally important that that comes out of here today that you know it wasn't somebody internally that caused this but I do think it is critical that you ensure that yeah that you don't get caught by something like this again and obviously the controls procedure to verify you know if you if you got a payment request and you had never made a payment to that person before surely somebody would have rang the person in the investee to confirm the payment request or to check the details for such a large payment I mean if I got if I got an email looking for an invoice for five million out of my entity you know you're not going to just pay it to a new person had that had that investee received money off you previously yes the year before so there was different bank details that's right how did that not get picked up like because the request came from a legitimate email of course and this it's not unusual when you've relationship over years and I see that they would look for different bank details but I'd assume for large amounts of money do you know the way if I want to send money to somebody I have to use the card reader and you have to verify the account you're sending it to yeah how did the money get sent to an account that wasn't verified within your own system yeah because the process over and back to the investee company you had a what they call a man in the middle that had a valid email coming over and back and yes and one of the failures is even a further independent check of that process so yeah no I that that that is a sickener because like to have to have got done like that is just it's unfortunate my last question and on the state claims agency a lot in 2024 you would have spent 229 million on legal fees and witnesses and is that correct million was in respect of damages legal costs and associated costs okay so just I know I was under the impression that the 220 million was on legal fees and expert witnesses is that correct CNAG what was the total legal it what was the total legal bill in terms of legal expenses and witness expenses for 2024 in the state claims agency I think the figure was that I gave was 229 yeah 229 is the associated expenses okay can I just ask 292 are the compensation payments okay so so in terms of the legal advice that she received how much did the legal advice that she paid for reduce the liability to the state so if he's if he paid 200 million on legal advice how much did the outstanding liability to the state go down now remember they did the amounts were paying a deputy are paid not just in respect of our own legal costs but they're in in respect also of plaintiffs legal costs but it's extremely hard to judge you know exactly like and give you a figure and say it's 20% or 30% the reality is that you know cases are complex there are you know large sums sought and there are agreements and and ultimately what we're there to do is to ensure that claims are settled at lowest achievable level and that's what we endeavor to do every day in all the claims work that we transact and hopefully we're doing that so very often you know we get for example requests for 30 35 million that we settled for you know probably 10 million and so thank you