Oireachtas committee calls for rules to allow Central Banks to refuse Israeli war bond sales
The Joint Committee on Finance on Tuesday published its Report on the Israeli Bonds Programme and says the Central Bank here and other EU Central Banks should develop a mechanism whereby an individual Central Bank can refuse to process any new prospectus certification requests.
Under the EU Prospectus Regulation, a prospectus must be drawn up, approved and published when securities are to be offered to the public or admitted to trading on a regulated market in the EU. Third Country issuers must choose one of the EU competent authorities in the EU as their Home Member State, subject to certain criteria set out in the EU Prospectus Regulation.
The Central Bank last month came under mounting pressure to reject the prospectuses of Israeli bonds, which are largely being used to fund the country's war efforts in Gaza, though it has argued because Ireland's central bank is designated as the competent authority to approve prospectuses for Israeli bonds sold in the EU, it has no legal authority to do so.
Third Country issuers of bonds must choose the central bank of a country within the EU as their home member state, a choice which is up to that country and not the chosen home member state.
In his appearance at the committee, Central Bank governor Gabriel Makhlouf said the bank is required to approve a prospectus where it meets the standards of completeness, consistency, and comprehensibility under the legislation. File photo: Paulo Nunes dos Santos/Bloomberg
Before 2021, Britain was the EU home member state for Israel, but following its exit from the bloc, Ireland was chosen by Israel as the new home member state. The Central Bank of Ireland approved the first prospectuses for the bond issuance programme in 2021, with the currently approved prospectus due to expire on September 1, 2025.
Committee Cathaoirleach Mairéad Farrell said: 'The facilitation by the Central Bank of Ireland of the Israeli Bond prospectus arose as a matter of concern for the Joint Committee in the previous Dáil, during which the committee initiated contact with the Central Bank to ascertain more detail around the process of prospectus approval.
"In line with these engagements, the committee understands that the Central Bank may only refuse the approval of a prospectus where the Central Bank has legal basis to do so.
'Ireland has been to the forefront and steadfast in its position of support and solidarity with the people of Palestine, but we must ask ourselves are we doing everything we can. The issuing of bonds by the State of Israel is seen to assist in the financing of Israel's continued violations of human rights."
The Joint Committee makes 15 recommendations in its report, including:
The Government engage at EU level with a view to amending the EU Prospectus regulations to permit each individual European Central Bank to refuse to act as a Competent Authority;
The Central Bank as the competent authority conduct an immediate internal review in advance of any renewal in September of the Israeli bond prospectus;
The Central Bank should seek legal advice and make information available which clarifies that their decision in approving a prospectus is not in breach of international law.
In his appearance at the committee, Central Bank governor Gabriel Makhlouf said the bank is required to approve a prospectus where it meets the standards of completeness, consistency, and comprehensibility under the legislation.
"Our legal obligations are clear and we do not need guidance to follow them," he is due to tell the Oireachtas Finance Committee on Wednesday.
"The law is also clear that, by approving a prospectus, the Central Bank does not endorse the issuer and does not endorse the securities."
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