Category: Banks & Finance

Quinn family claims are outrageous

Patricia Quinn and her children are claiming that the huge loans made to them by Anglo Irish Bank are invalid because they are tainted with illegality.

Obviously these claims are untrue.

I’m sure that if state authorities were aware of even the slightest hint of wrongdoing by those responsible for running Anglo there would be hell to pay.

It’s been three years now since Anglo got into trouble and not a single official has been charged with any wrongdoing

So obviously these outrageous claims are nothing more than sour grapes by the Quinn family.

Ireland's banana republic reputation spreads to Australia

Ireland’s banana republic reputation, when it comes to financial regulation, has spread to Australia.

It was 2007 when The New York Times dubbed Dublin the wild west of European finance.

This was the opening line by Emma Alberici, European correspondent for the Australian current affairs programme AM (Read and listen to Alberici’s report here).

Alberici was reporting on the latest failure of Ireland’s so called Financial Regulator to enforce the law.

Jonathan Sugarman was the head of risk management at the Dublin office of Italy’s UniCredit bank which runs a $50 billion operation in Ireland.

Sugarman was forced to resign after his chief executive consistently asked him to break the law.

Clearly, Sugarman’s boss was confident that he operated in a jurisdiction where financial law enforcement does not exist.

The Central Bank told the Australian broadcaster that it was still examining the allegations first brought to it by Sugarman four years ago.

Here’s what Sugarman had to say:

I left the bank’s offices, I walked down to the regulator’s office, I wasn’t going to leave it to anyone to deliver it but myself, and nothing happens.

That is like walking in to a police station with a knife with blood on it and saying I’ve just killed someone and you expect the police to say well where’s the body? Where’s the person? What have you done? And they just say, fine, just don’t do it again.

And that left me dumbfounded.

The bottom line is that the Irish Financial Regulator does not actually regulate, it does not enforce the law.

For many years now it has, effectively, operated a policy of telling white collar criminals to pay back any money robbed and not to do it again.

This irresponsible attitude has resulted in massive hardship and loss for countless thousands of Irish citizens.

The policy has also played a major role in the loss of Ireland’s financial sovereignty and the impoverishment of generations of Irish citizens to come.

Copy to:
Financial Regulator

Dail question on CHC scandal

My local representative, Fine Gael TD David Stanton, has replied to my request for a Dail question on the CHC scandal.

Dear Anthony,

Thank you for your email below. Just to let you know I tabled the below Dail question to the Minister for Finance today, so should have a response next Wednesday evening. I will pass it on to you as soon as I receive it.

Best regards

David Stanton TD

Written Question from David Stanton TD

To ask the Minister for Finance if he has received a report from the Financial Regulator in 2009 regarding an investigation into a company (details supplied); if it is intended to publish same and will he make a statement on the matter.

(Details: Customs House Capital)

(See below for my letter to deputy Stanton).

6th December 2011

Dear Mr. Stanton,

In early 2009, after receiving information from an unknown source, the Financial Regulator carried out an investigation into a wealth management company called Customs House Capital (CHC).

Apart from some supervisory and organisational issues the Financial Regulator found no significant problems with the company. The Financial Regulator adopted the following strategy – I quote.

Following the identification of these supervisory concerns, related to compliance and organisational issues, the strategy was to encourage CHC to identify and engage with potential buyers for the firm, which would be the best outcome to protect client investments and funds.

CHC took up this advice and sold its non-property assets to a company called Appian Asset Management.

Within a very short time Appian Asset Management discovered that CHC had been engaged in major fraud and immediately informed the Financial Regulator.

In 2010 the Financial Regulator carried out yet another investigation into CHC and found that major fraud had indeed been going on within the company.

Full details of the 2010 investigation are available to the public on the Financial Regulator’s website.

I requested details of the (alleged) 2009 investigation and was informed that this report was not available to the general public under secrecy laws. (Section 33AK of the Central Bank Act, 1942 (as amended).

The conduct and conclusions of the 2009 report are absolutely crucial in determining whether the Financial Regulator is, as claimed by this government and its predecessor, truly reformed and fit for purpose.

I request that you ask the following questions in Dail Eireann.

Why is the 2010 report legally available while the 2009 report on the same company, on the same matter, is deemed to be a state secret?

Why did the (alleged) 2009 investigation by the Financial Regulator fail to detect the major fraud that was going on right under the investigator’s noses?

Has the Financial Regulator taken any action to determine why its staff failed to detect what a company (which was not conducting an investigation) detected almost immediately on examining the books of CHC?

Why has there been no arrests arising from this matter? It is a verifiable fact that similar cases, in functional jurisdictions, quickly resulted in arrests, charges and prosecutions.

The following is a quote on the matter from High Court Judge Mr. Justice Hogan delivered on 28th October 2011.

In fact, the report describes a long litany of general misfeasance and wrong-doing, ranging from the systematic deliberate misuse of funds, gross impropriety, corporate misfeasance and false accounting to trading in a fraudulent manner.

Yours etc.

Anthony Sheridan

This request has also been forwarded to a representative of every political party.

Copy to:
Financial Regulator

Financial Regulation: Secrecy and obfuscation still the weapons of choice

The Custom House Capital (CHC) false accounting and fraudulent trading scandal is a very serious matter but, unfortunately, not a rare event in Ireland.

What should be of much greater concern to the people of Ireland is how this scandal has exposed the lie that financial regulation has been reformed and is now fit for purpose.

Soviet style secrecy and obfuscation are still the principal weapons employed by the Financial Regulator to prevent even the most basic information concerning its activities being made public.

The Financial Regulator claims it carried out an investigation into CHC in 2009 and found nothing more than some supervisory, compliance and organisational issues.

It was only when an outside agent became involved, in this case a company that had bought a section of CHCs business, that the fraud was uncovered.

The failure of the Financial Regulator to detect major fraud within a company that it was, allegedly, investigating raises some very serious questions.

In my opinion there are four possible reasons for this failure in regulation.

1. There was no investigation in the first place and the Regulator is now lying to cover up its failure.

2. There was an old style, pre financial catastrophe investigation. This would involve much drinking of coffee, hours of friendly chat with an occasional glance at some minor aspect of the business under investigation and the compilation of a report that found everything was just hunky dory.

3. Financial Regulator staff are so incompetent that they failed to uncover what Appian Asset Management immediately uncovered on taking over CHCs books.

4. There was a serious investigation and serious fraud was discovered but a cover-up strategy was adopted by the Financial Regulator.

This last possibility is most likely to be the truth.

Irish citizens know, to their great cost, that it is quite common for so called regulators to cover up fraud and criminality within the financial sector.

The DIRT and Ansbacher frauds are just two of the more serious examples of this strategy.

The crucial point arising from this particular scandal is not just that white collar crime is still tolerated by state authorities but that the same old strategies of secrecy and obfuscation are being employed to, effectively, protect the guilty.

Copy to:
Financial Regulator

CHC fraud: Liam O'Reilly's evidence

Liam O’Reilly was the Property Fund Administrator with Custom House Capital when the company was engaged in false accounting and fraudulent trading.

I have been assured by the Financial Regulator that this is not the same Liam O’Reilly who once held the position of Financial Regulator.

Here’s some of Mr. O’Reilly’s evidence.

Liam O’Reilly – Property Fund Administration – 3pm on Monday 18 July.

4.2 Sworn testimony to Inspectors.

The witnesses called by the Inspectors were asked to describe the Destiny structure, comment on whether they were aware of a process whereby funds from one sub-trust may have been used to fund the expenses of another or others and asked who authorised such payments..

Further on in the evidence of Mr. Liam O’Reilly

Q. Right. Okay. The problem being some are under water.

A. Exactly. And the money isn’t there. It has been very, very difficult the last few months

Q. All right. Okay. So in the context of I suppose the clients statements in relation to — well, the areas that you’re familiar with, Liam, are — would it be true to say that some of those clients, their unit position there is not really reflecting the true position if — if the pooled accounts were pulled apart?

A. I sign off on them and I stand over it, you know. They’re 100 percent accurate. The issue is, if that client, you know, wanted to sell his property in the morning, and maybe there was a cash balance of 100,000 in one of these accounts, it may be difficult in getting that out.

4.4 Conclusions

The Inspectors are of the view that the practice of using available cash balances on the pooled cash accounts to pay invoices and other expenses of individual sub-trusts, particularly those of the larger commercial/syndicated trusts, was pervasive within CHC for a considerable time.

Unit holders in the affected sub-trusts would not be aware that this was taking place having regard to the pooled nature of the cash accounts and the fact that in any statement issued to them by CHC their holdings in the trusts would be reflected as units held.

As each trust would appear to be a separate legal entity, the problems in resolving this issue will be most acute in relation to those trusts which a) in aggregate owe money to the pooled accounts and other trusts, b) have little cash holdings in their own right and c) have poor or negative cash flows.

A thorough analysis of each trust’s transactions will be required.

Based on the testimony received and the forensic examination the practice would appear to have existed for some time within CHC.

The scale of the problem appears to have increased to some extent in 2011.

Taoiseach's speech: The usual waffle and denial

Because Enda Kenny’s address to the nation was little more than the usual collection of meaningless platitudes it is easy to analyse.

Point One: As a nation we are living beyond our means (Borrowed from the criminal politician Haughey).

Point Two: You, ordinary citizens, are not to blame. (But you will pay the price for the political and financial corruption that has destroyed the country).

Point Three: We must ensure this never happens again. (This is standard waffle which is usually followed up with – we must move on, the past is another country; anger is not a policy etc., etc.).

The key point in the Taoiseach’s speech was, however – who he blamed for the catastrophe?

If, as he had already stated, the Irish people weren’t to blame – then who?

Let me be clear – Ireland supports stronger economic governance throughout Europe, and particularly in the Eurozone.

In fact, the Irish people are paying the price now for the absence of such rules in the past.

So there you have it. It is now almost universally believed within Ireland that Europe is the cause of our complete failure as a state.

No mention of political corruption, no mention of financial corruption and no mention of bureaucratic corruption.

And why would there be any mention of the real causes of our failure as a state?

After all, to do so would mean having to leave the bubble of denial and enter the brutal realty of what we really are as a nation.

The CHC fraud proves that there is no effective financial regulation in Ireland

Prior to the collapse of Ireland’s economy in 2008 there was a universal belief that Ireland possessed a functional financial regulatory system.

Subsequent to Ireland’s economic collapse there was a universal belief that light touch regulation was the core factor in bringing about the catastrophe.

Presently there is a universal belief that financial regulation has been radically reformed and is now fit for purpose.

All of the above beliefs are false.

Ireland has never enjoyed the benefits of real financial regulation. This is not an opinion, it’s a fact.

No financial institution or official has ever been charged with a crime despite the theft of countless millions over the decades.

Ireland did not suffer from light touch regulation; it was destroyed because there was no effective financial regulation whatsoever.

So called regulators knew about most of the major crimes committed over the years, like DIRT and Ansbacher, but did nothing.

When the media and whistleblowers (the real regulators) uncovered crimes that the Financial Regulator was not aware of no significant action was ever taken against the criminals.

As I write Irish citizens are continuing to suffer great losses because there is still no effective financial regulation in Ireland.

If what we are told by politicians, government officials and so called regulators is true, then the people involved in the Custom House Capital fraud would, at the very least, be under arrest.

That the people involved in this fraud are still walking around, enjoying the same rights and freedoms that law abiding citizens are entitled to, proves that there is still no effective financial regulation in Ireland.

Custom House Capital specialised in pensions for wealthy customers and managed investments of about €1.5 billion for about 1,400 clients.

The firm also invested in property in France and Germany on behalf of clients.

The company misused €56 million in clients’ money to cover up troubled property deals.

A report on the matter submitted to the High Court states:

There was a systematic and deliberate misuse of assets and cash belonging directly or indirectly to clients of CHC.

This misuse was deliberately disguised by CHC through the use of false accounting entries and the issue of false and misleading statements to clients.

The High Court ordered all reports on the matter to be sent to the Director of Corporate enforcement, the DPP, the Garda Commissioner and Revenue.

The so called Financial Regulator investigated CHC in 2009 after somebody noticed a strong odour coming from the company but, predictably, found nothing of great import.

Some managerial changes were recommended and the matter was dropped.

It was only when another company, Appian Asset Management, had taken over the non-property investment assets of CHC that serious concerns were raised.

It was only after this company acted that the so called Financial Regulator took any significant action.

Let’s repeat these facts as starkly as possible.

In 2009 the so called Financial Regulator carried out an in-depth investigation into CHC and found that, apart from some supervisory and organisational issues there was no significant problems with the company.

Here’s what the Regulator decided to do.

Following the identification of these supervisory concerns, related to compliance and organisational issues, the strategy was to encourage CHC to identify and engage with potential buyers for the firm, which would be the best outcome to protect client investments and funds.

CHC took that advice and shortly thereafter sold part of its business to another company, Appian Asset Management.

It seems that this was an attempt by CHC to off load that section of its business where the fraud occurred while holding onto its property assets.

Remember, this is, effectively, what the Financial Regulator advised.

The crucial point in all this is that a company that wasn’t engaged in any investigation easily discovered major fraud in a company that had just been investigated by our so called reformed and fit for purpose Financial Regulator.

It should also be noted that CHC was heavily engaged in fraudulent activity in 2009 when the Financial Regulator was, allegedly, investigating the company.

One of the victims of this CHC/Financial Regulator scandal precisely summed up my views on this matter (My emphasis).

I would like to see some criminal charges against those involved.

I would like to see an action taken against the Central Bank (Financial Regulator) because they were protecting the firm when they should have been protecting the consumers.

As I say; there is no effective financial regulation in Ireland.

Copy to:

Financial Regulator
Dept. of Finance
Director of Corporate Enforcement
DPP
Revenue
All political parties

Reminder: Ireland is not to blame for the catastrophe

At the very beginning of a Prime Time special last night viewers were ‘informed’ of who was responsible for Ireland’s woes.

2,000 miles away a country in turmoil lit the spark in a wildfire that would overwhelm Ireland and threaten to destroy the single currency.

Greece, according to the programme, was brought to the brink of financial collapse by a combination of corruption, chronic indebtedness and a dysfunctional tax system.

Ireland, on the other hand was ‘damaged’ by a combination of reckless banks, inept regulators and disastrous economic policies.

For a full hour the programme analysed the loss of Ireland’s financial independence without once mentioning the word ‘corruption’.

It is no mean achievement to analyse a country brought to ruin by political, financial and administrative corruption without once referring to that reality.

Greece is corrupt; Ireland is not, apparently.

So let’s bring ourselves up to date on who is to blame for the catastrophe visited upon Ireland.

The global financial crisis.

Lehman Brothers.

The German and French banks

And now – the Greeks.

Copy to:

Prime Time

For Marian Finucane's information…

One of the ‘sensational’ claims made by David Drumm to journalist Niall O’Dowd was that Central Bank and the Financial Regulator knew everything that was going on in Anglo and that they in fact acted as a ‘team’ throughout 2008.

O’Dowd admitted that he was completely unaware of this situation and clearly sees it as a major, new, news story.

Finucane was also astonished on hearing the claim. It would be quite extraordinary, she gasped.

Such ignorance from O’Dowd is understandable, he lives in America and is obviously not the brightest of journalists.

But there is no excuse for Finucane who has, for decades, been at the centre of events in Ireland.

She must know (or maybe she doesn’t) that the Dept. of Finance, the Financial Regulator and senior politicians knew about the DIRT fraud, knew about the Ansbacher fraud and knew about dozens of other frauds within the Irish financial sector over the decades.

The authorities never took any action to bring these frauds to an end. The criminals were allowed free rein to plunder the state and its citizens at will, without fear of ever being brought to justice.

And just for Marian Finucane’s information, the situation remains exactly the same as I write.

That is, there is still no financial regulation in Ireland when it comes to the financial sector; crime is still rampant within the sector.

Copy to:
Marian Finucane