Refusing to talk

Aer Lingus has refused to say if disgraced banker, Sean Fitzpatrick, availed of free flights on the airline (Irish Independent).

Aer Lingus has refused to give details of other directors who may have availed of the perk.

Aer Lingus has refused to give details about a Gold Circle club which allows members to relax in exclusive airport lounges while waiting for flights. (Bizarre isn’t it – An official golden circle does actually exist)

Transport Minister Noel Dempsey has refused to defend the taxpayer’s interests in Aer Lingus only managing to limply mouth that he was “sure” the perks were under review.

Fitzpatrick, who has refused to answer questions on the Anglo Irish Bank scandal, and is also refusing to make any comment on this matter contemptuously informed the nation.

I don’t talk to the media.

Banks as bacteria

Scientist Harvey Rubin suggests a new financial regulatory system based on the adaptive abilities of bacteria in nature (New Scientist).

Two results in particular will resonate with the financial sector.

One predicts which bacterial genes are essential and which can be knocked out without killing the organism.

This is the bacterial version of asking “is this bank too big to fail; if I get rid of it, will the whole system crash?”

The second models how flocks of birds or schools of fish perform collective tasks without centralised coordination. It is not a big stretch to propose that financial group behaviour, like panic selling, may be analysed using these tools.

I think, under this system, Anglo Irish Bank would have been rejected as non essential.

Don't worry, the banks will do the right thing

Brian Lenihan, admitting that the NAMA legislation doesn’t force the banks to do very much, said they have a moral obligation to do the right thing.

I recommend this excellent analysis Gavin links to of the danger this government has exposed the taxpayer to in its scramble to protect the interests of bankers.

NAMA: Potential for corruption

During a discussion on NAMA today on RTE news (1st report, 1st item) there was a very interesting exchange between RTEs Business Editor, David Murphy and former Bank of Ireland chief executive Mike Soden on the possibility of corruption entering into the process.

David Murphy:

In this whole process as NAMA begins to try and run these loans as they’ve been acquired it’s fairly clear that there is latitude for corruption unless there’s significant measures in there to stop it…

…if you have corrupt individuals there at the helm within NAMA or elsewhere they are in a very, very powerful position and they are going to be making significant deals with significant investors…

…So there is going to be an issue there and it’s really important they make sure that part of the legislation is watertight.

Mike Soden:

One of the things that I’ve suggested a couple of times is that everything discussed between NAMA, the Government, the bankers and the developers should be done under oath.

The consequences of that is if you commit perjury there’s an automatic jail sentence and until we get some teeth into the legislation we are not going to get the results we want.

You’re saying (assuming) – ‘Everybody will behave as good boys’, well I don’t believe it and I think we have to make sure that they do behave.

But if the NAMA officials and experts are doing the valuations what then is the big risk?

Murphy:

One of the risks is that you’re in a situation where NAMA is going to take over an awful lot of properties and obviously there’s going to be latitude for people who want to buy those sites at certain prices to try to bribe public officials…

…Obviously we’re talking about buying an enormous amount of property in what is a falling market. If that market rebounds that property could be very valuable.

Our history as a country isn’t exactly squeaky clean when it comes to corruption both at government and builder levels.

Soden’s comment about automatic jail sentences for perjury is hilarious.

We have witnessed numerous politicians, businessmen and government officials lie through their teeth under oath at tribunals and other investigations. Not a single one has ever been charged never mind actually jailed.

It is only ordinary citizens who end up in jail for perjury, politicians, property developers and bankers are obviously exempt.

Provision has been made in the legislation that makes it illegal for interested parties to lobby politicians but it is an absolute certainty, given the rampant level of corruption in Ireland. that this law will also be ignored.

So, all in all, a great big happy (incestous) family

Senator Shane Ross writes today about the various activities of former Financial Regulator, Liam O’Reilly.

O’Reilly is a director of Irish Life & Permanent and, at the same time, chairman of the Chartered Accountancy Regulatory Body (CARP) which is investigating the €8 billion deposits exchange between Irish Life and Permanent and Anglo Irish Bank last year.

Not to worry though, a spokesman for the Institute of Chartered Accountants of Ireland, the body that oversees CARP, said that in their opinion there was no conflict of interest – Well, that’s all right then. If the ICAI is happy, we’re all happy.

Senator Ross also reminds us that O’Reilly was the Financial Regulator who failed to act against AIB overcharging in the years leading up to 2001. And as we witnessed last week AIB is still faithfully preserving that age old traditon of overcharging by Irish banks.

The Senator didn’t mention that O’Reilly is also a company director of Merrill Lynch which is under investigation for a potentially massive irregularity which may involve undisclosed losses of £284 million.

The Financial Regulator is ‘monitoring’ the situation but, as usual, is unable to make any comment because of strict secrecy laws.

And of course Merrill Lynch is also advising the Government on how to manage the financial crisis.

So, all in all, a great big happy family.

Sometimes, sanity must take precedence

Sometimes the sheer scale of corruption, incompetence and ignorant arrogance that infects Irish public and business life can be a bit overwhelming.

I was listening to the radio yesterday while reading various media reports on the FÁS scandal, the C&AGs report, NAMA and so on when I spotted a headline on the RTE News website:

AIB to refund €400k in overcharged fees

Oh, I thought to myself, that must be an error, they must be referring to the recent Bank of Ireland overcharging incident.

Then I thought I must have somehow accessed an old news report on an AIB overcharging, but no, I was actually looking at yet another overcharging by this rogue bank.

As usual the contemptible Financial Regulator had no comment on the matter.

Ok I thought, that’s enough. I switched off the computer, made a cup of tea and sat out in the garden to enjoy the sun – sanity, after all, must take precedence.

Banking error or scam – We'll never know

Once again Irish consumers find themselves the victim of a ‘banking error’. Customers of Bank of Ireland have been ‘mistakenly’ double charged to the tune of millions on their Laser cards (Irish Independent).

These so called ‘errors’ are very common in Ireland and always follow the same pattern.

The ‘error’ always favours the bank never the customer.

It’s always a customer, the media or a whistleblower who notices the ‘error’ – never the bank, never the Financial Regulator.

Bank officials are never to blame; it’s always the fault of a computer.

The bank always apologises because apologies are magic in Ireland – they completely wipe any need for accountability.

The bank always promises that the ‘error’ will never happen again – It always does.

The bank is allowed to investigate itself and report to the Financial Regulator in its own good time, if ever.

The bank is never punished for such ‘errors’. They are merely required to return monies robbed or taken in ‘error’.

Bank of Ireland spokesman, Brendan Nevin, was asked about the bank’s contact with the Financial Regulator (News at One, 2nd report).

We have been in contact with the FR explaining what happened and in due course we’ll confirm the full details of our investigation to the regulator.

Because banks are not actually regulated by the Financial Regulator Nevin became confused when asked if the FR wanted the bank to do anything else; he spluttered in reply.

Well, in general the FR would want us to be clear about all our facts which is what we’re doing at the moment.

We’ll never know whether this incident was a genuine error or yet another scam to rob customers because the so called Financial Regulator has no interest in protecting consumers and banks, who are still allowed to operate pretty much as they like, are unlikely to admit wrongdoing.

Copy to:
Financial Regulator

I don't believe a word they say

Brian Cowen responded as follows when challenged on the Late Late Show regarding banks sharing the pain of recovery.

We guarantee that NAMA will not be in a position where it has a deficit and if that deficit emerges we will make sure that a levy system will ensure that the money comes back from the banking system.

Brian Lenihan and the Greens have also sought to reassure taxpayers that the banks will be hit with a levy or extra taxes to make sure they take their share of the pain.

The problem with all these assurances is that they are only promises. To my knowledge there’s nothing in the NAMA legislation that will force the banks to pay their share.

We are being asked to trust politicians who, for decades, have worked very hard to protect the interests of bankers at the expense of consumers.

I don’t believe a word they say.

Senator Boyle, bankers and the ODCE safe house

A recent article in the Financial Times analysing Ireland’s economic woes quoted Green Party chairman Dan Boyle on the question of making bankers accountable.

I have strong hopes that the ongoing investigations of the director of corporate enforcement and others will lead to the prosecution of those in the banking system who broke the law. But as yet, there is no opportunity for the senior bankers – some of the best-paid people in our society – to account for the catastrophic failures in their organisations, for which we will all have to pay.

It’s difficult to tell whether Boyle’s integrity has been seriously damaged by his association with Fianna Fail politicians or if he’s genuinely naïve in thinking that bankers will actually be brought to account.

I know I’ve said it before but it really does need to be repeated – No banker will be brought to account unless there’s a virtual revolution in the way the corrupt Irish state deals with white collar crime.

Boyle is a fool if he genuinely believes that the Office of Corporate Enforcement (ODCE) has the power or resources to make bankers accountable – it does not.

The ODCE deals with small time infringements by small time business people but, in effect, it also acts as a safe house for those who have committed or are under suspicion of major white collar crime.

The idea is simple but very effective – when suspicions of or actual white collar crime is uncovered the cases are transferred to ODCE where they stagnate for years until they are forgotten.

The guilty have nothing to fear from ODCE as its powers are pathetic, usually involving nothing more than a ban of a couple of years from acting as a company director.

The following is a list of those currently enjoying the safe haven that is the ODCE.

The Bailey brothers – Engaged in long-term tax evasion (made a €22 million settlement with Revenue), bribed public officials, gave false evidence under oath and obstructed a public inquiry.

National Irish Bank officials – In charge when millions were robbed from customers and the State.

Jim Flavin of DCC – Found by the Supreme Court to have defrauded the Irish Stock Market of €83 million.

None of these people will suffer any loss whatsoever as a result of their activities. They, and the bankers who have recently joined them in the ODCE safe house, will continue to enjoy the effective protection of the ODCE for so long as politicians like Dan Boyle remain ignorant of what’s really going on in this country.

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Senator Boyle
ODCE