Interested in maladministration. Estd. 2005
I haven’t noticed a great deal of comment after the Bank of England decided to print off £75 billion in an effort to stabilise the economy.
I heard some spokesperson say that they would continue to print off money as necessary until the crisis was resolved.
This looks to me like the last desperate throw of the dice, if it doesn’t work there will be no other option but to sit there and watch the UK economy go down the same road (tube) as Zimbabwe – Serious stuff.
Green Party Leader and Minister for the Environment; John Gormley had the following to say when asked about being a watchdog in government (RTE News, including audio and visual at bottom of page).
“We never assigned ourselves that role because it’s a role which you cannot fulfill properly and do your work as well. We’re not the moral watchdog of any political party…we look after our probity and our standards…we cannot be responsible for events that took place before our entry into government.”
This principle is still as bizarre as it was when first adopted by the Green Party as an excuse not to act against the chancer Bertie Ahern. Challenging and bringing to account those suspected of corruption is a crucial role for all members of a real democratic government.
Sticking your head in the sand and saying, ‘we’re just going to look after our probity and standards’ is mealy mouthed and cowardly and is a betrayal of basic democratic principles.
Green Party chairman, Dan Boyle, warned that Ireland cannot progress as a nation until those responsible for recent events are imprisoned – So, that’s it, no more progression.
On the plus side for the Greens. Minister of State at the Department of Agriculture, Trevor Sargent, is travelling to Paris for St. Patrick’s Day. He’s flying Aer Lingus, not using any (road) transport at taxpayer’s expense and saving on an expensive hotel room by staying at the embassy.
Obviously, his Excellency, Martin Cullen couldn’t be expected to endure such deprivation but other ministers should be encouraged to follow Sargent’s good example.
Copy to:
Green Party
People sometimes wonder why it is that people like the corrupt Haughey can live out an entire career without ever been brought to justice. They wonder why people like Jim Flavin can be found by the Supreme Court to have engaged in insider trading and yet remain a free man. The following incident on Today with Pat Kenny (Friday) provides a clue.
During a discussion on the claim by the chairwoman of Irish Life and Permanent, Gillian Bowler that she didn’t know about the apparent fraudulent transfer of seven thousand million to Anglo Irish Bank Pat Kenny interrupted and said:
“I have to say, by the way, I know Gillian Bowler, when she tells me she didn’t know I believe she didn’t know.”
Copy to:
Pat Kenny
Every time corruption rears its ugly head in Ireland we automatically switch on the talk machine. We talk, discuss, waffle, argue, accuse but we never, ever act. Here’s a sample of quotes I took from some recent taped radio discussions.
“We need something quicker than the ODCE, NIB took ten years.”
“As I understand it the OCDE can order a High Court inspector to go in.”
“I’m surprised it hasn’t happened before now, before Christmas to be honest.”
“I think it’s a cynical political ploy to please the masses.”
“I can’t understand how the toxic ten will be allowed to walk away. It’s absolutely criminal, we will end up paying. Look at the education cuts, these guys are going to walk away.”
“What I find fascinating is the people who owe €300 million to Anglo Irish and can’t be named.”
“There are so many things about this that are so complacent. Take the 7 billion, Brian Lenihan said that was referred to in the note of the PWC report in October and that he didn’t really read it and he didn’t get the full detail of it until January. Why then was it only when the Sunday Business Post broke the story which said these deposits were under investigation and RTE said it actually related to Irish Life and Permanent and 7 billion that he was then suddenly interested in calling Gillian Bowler in and asking ‘what’s going on’?
“That’s one of the things that’s perplexed me. If it was worth their resignations in February, surely it was worth their resignations in January?”
“And this feeds into Ireland’s international reputation. It’s closer to Bogotá than Berlin without the coke.”
“A colleague of mine was on the phone to a London stockbroker and in the background he could hear another dealer shouting – No Irish, no Irish.”
“We’ve just been abandoned by the international community.”
“The Irish banks have been running a cartel; it will have to be investigated.”
“The auditor’s must have known.”
“I’m staggered, I’m shocked.”
“I’m terribly disappointed that the company did not have the high standards that I thought it had.”
“It’s fraudulent financial reporting.”
“That’s why I’m baffled why the Financial Regulator could say there was nothing illegal about the Fitzpatrick loans.”
“It’s like the way the Catholic Church deals with all sorts of abuse. They deny it, change the story, and protect the system at all costs. Protect the system and don’t apply the law.”
“We have made mistakes.”
“In defence of Irish Life and Permanent, they were open; they reported it to the Regulator.”
“We have taken a reputational hit and there’s a huge job to try and restore that reputation.”
“Irish Life and Permanent were trying to make Anglo Irish books look better.”
“Cosy Irish capitalism.”
“Well, the truth of it is that every country in the world is trying to grapple. Every country across the world has had regulatory failure so Ireland is not alone in this.”
“We were all caught up in the exuberance of the Celtic Tiger. This is only clear in hindsight. It was the same across the globe. We are where we are.”
“Remuneration has to change; the Government is committed to look at this. We’re in different times; the structures of the past didn’t serve us well.”
“This seems to have been an attempt, legal or otherwise, to rig the Anglo share price.”
“It beggars belief. I’ve never seen more apathy towards such a staggering piece of news (Anglo Irish scandal) from the London investment community and that’s key because it’s come to a stage now where the credibility of the Irish financial system, the Irish economy as a sensible place to do business is actually starting to be questioned and I find that quite horrifying.”
“It’s an absolute outrageous abuse, I mean if your looking at those accounts and trying to get a picture of how safe that bank is and they present it like that, that’s a fraudulent presentation, there’s no other explanation for what it is…it’s absolutely outrageous that we didn’t know until now, that’s a huge amount of money, seven thousand million euro of a fraudulent presentation.”
“Exposing a culture that existed all through those boom years that we’re now paying for and the Michael Lynn interview, it too deals with that culture, he says we were all part of a mythical illusion. There was rules for some and other rules for others.”
“The law will be followed justice will be done. That’s what has to be done because our international reputation has been damaged.”
“What I don’t understand in all of this. He (Brian Lenihan Anglo Irish report) receives this information in January, he doesn’t even tell the Taoiseach about it but then when it’s the headline on the 9 o’clock news and on the front page of all the newspapers he decides that heads have to roll. Surely if it’s right that people have to resign it was right for them to resign in January not just when it’s on the 9 o’clock news?”
“What about the Regulator, what about the Central Bank, what were they doing in relation to all of this.”
“Whatever action is taken, it has to be taken immediately.”
“People are angry and upset. There are people who have children losing employment and income. I think people feel the Government has totally lost the plot.”
“The question is what are we doing in relation to the damage to our reputation. I believe we’re taking the appropriate action and I think that further action is required in relation to the banking sector which needs to be taken immediately.”
“I think we’re faced with the perception of a lack of poor governance in the country. Just two things: On Bloomberg television – Ireland another day, another scandal. Then on Friday – The Irish bailout, one message of this bailout is that the Irish bank executive’s self-preservation society has scored another success”
“Can’t there be an element of sniffiness here in particular when it comes to the British media? It not as though they don’t have enough problems of their own. There’s a lot of enthusiasm in parts of the British media for dumping all over Ireland.”
“We don’t rank much more on a given day in any trading room around the world. Ireland pops up; it’s about a 30 second session and onto the bigger areas in the financial markets.”
“It’s been a culture of greed and avarice in Ireland over the last 25 years or more. It only opened up to the public because we’re a secret society in this country in most things. It only opened up when the tribunals came along and we did get an insight there into how big business works in Ireland. We saw that some of the top politicians were corrupt and this seems to have spread into the banking system.”
“We’re all to blame.”
For so long as the corrupt system remains in place no banker will be arrested, charged or put in jail. The only thing we can be sure of is – the talk will go on and on and on and on………
When AIB chief executive Eugene Sheehy was asked (2nd report) why he should still run the company he replied:
“Because I have the confidence of the people that matter.”
Indeed, but wasn’t that the cause of the problem in the first place?
Niamh Brennan, Professor of Management at UCD is a very confused woman. Here’s what she had to say on RTE recently (1st report, 2nd item) regarding the Anglo Irish fraud.
“I’m terribly disappointed that the company did not have the high standards that I thought it had.”
“The accounting standards are very explicit, transactions should not be entered into for the purpose of disguising the truth. What has happened here is a case of deception on the part of Anglo Irish Bank.”
“It is fraudulent financial reporting, I’ll repeat it again because I feel so strongly about it; that is why I’m so baffled, why the Financial Regulator could possibly say there was nothing illegal about the Fitzpatrick loans, I cannot accept that.”
Professor Brennan is baffled because like so many so called experts she still labours under the illusion that Ireland is a normal democratic country. She still believes that politicians, Government officials and regulatory agencies all work for the good of the country, she still believes that the State is intent on prosecuting the corrupt rather than facilitating them, despite overwhelming evidence to the contrary.
Here’s an article she wrote on 3rd June 2004. (My emphasis with comments in brackets).
Shame of our low standards in high places
I am one of the few people that think Enron is a great thing to have happened. That is because around the time of Enron, I established the Institute of Directors Centre for Corporate Governance at UCD. This is a joint venture with the Institute of Directors. Business has been booming ever since.
Happily (for me, but not for the thousands of investors that have lost millions) corporate scandals continue to fill newspapers. This reminds company directors that being a director nowadays carries very onerous responsibilities and risks. Directors need to get training – to make sure they don’t appear in the national newspapers wearing handcuffs, or worse still join George Redmond in jail.
(As corporate governance is a joke in Ireland any director who actually paid for such a course is a fool).
A fairly predictable consequence of corporate scandals, is a call on politicians to do something to sort out the mess. This usually results in even more regulations and laws. This is what happened as a result of the DIRT scandal.
(And the call in response to the current scandals is for even more regulation, anything bar actual prosecutiions).
We now have a new Accounting and Auditing Act which makes even more demands on directors. However, we now also have a very fine regulatory environment in Ireland. In fact, so good are these new regulations, that (shortly after the Enron scandal) Brian Walsh, chief executive of the Institute of Chartered Accountants, described them as a very fine example of public policy development. He said that Ireland would be a leader in the field in corporate governance.
(Remember, this was written in 2004).
Many commentators are complaining about this legislation – that excessive regulation stunts entrepreneurial activity and takes people away from doing business. But I believe the converse is the case. Strong regulation is good for Irish business. It will attract quality investors from abroad.
Low standards in corporate life turn off quality investors, and attract the kind of investors the country would be better off without. The problem with more regulations is that the good guys kill themselves to continue to observe and apply our laws to the highest possible standards, at a considerable cost to their business, both in time and money.
Meanwhile, the bad guys continued to do as before, and approach any new regulations in their usual tickboxing, ritualistic way. Within their inner sanctums, behind boardroom closed doors, they continue to feed their personal greed by cutting corners, and in some cases by outright corruption.
(And we are still waiting, since the foundation of the State, for the first prosecution).
Ireland continues to suffer from the consequences of very low standards in public and corporate life, as featured in the all-too-many tribunals currently in progress. As a result, we are at the wrong end of worldwide corruption indices. This is not good for business, and won’t help us attract top class investors to Ireland.
(But it did attract a large cabal of chancers to the ‘Wild West’ IFSC centre).
In spite of the whingeing from some quarters, while our new regulations are onerous, they are ones which I believe will stand the test of time and which will even become a source of pride to us.
(No wonder the Professor is baffled).
The problem with corporate governance is us – us human beings – and our tendency (on occasion) towards dysfunctional behaviour. Each one of us has to take personal responsibility for our behaviour, for its affect on public and corporate life, and for the messages we send out about the kind of society in which we want to live. I believe that as a society, we are ambivalent about high standards of behaviour in public and corporate life.
(We are indeed ambivalent but that does not excuse the State facilitating white collar crime).
For example, after revelations of questionable (to put it mildly!) dealings in relation to his taxation and other financial affairs, not only did the voters of Tipperary North in the 1997 general election elect Michael Lowry, they put him at the top of the poll. All those voters made a clear personal statement about their attitude to standards in Ireland.
(Agreed, Irish people are politically ignorant with a complete inability to make the connection between voting for a corrupt politician and the inevitable consequences that will follow).
Thus, while we roar and shout when a new corporate scandal breaks, many of us have questions to answer about our own personal day-to-day behaviour and the way in which it influences standards in Ireland, both corporate and otherwise. No laws or regulations can prevent greedy, self-serving behaviour by company directors.
(Wrong. If a company director sees a colleague going to jail he/she will think twice before engaging in corrupt practices. The witnessing of law enforcement is a strong disencentive to wrong doing. The problem in corrupt Ireland is that, for white collar criminals, there is no law enforcement so, in effect, they can do as they wish – and they do).
Add to this, that greedy, self-serving people seek each other out. The old Irish phrase “Aithnionn ciarog ciarog eile” (one “beetle” or maybe “cockroach” recognises another) captures this aspect of corporate life beautifully.
(Ah yes, Haughey/Ahern come to mind).
So on top of good rules and regulations, there has to be a real meaningful engagement, and a commitment to good practice, from each individual human being around the boardroom table. These additional regulations are scary – especially the requirement on directors to sign a statement saying they have complied with company, taxation and other relevant legal regulations.
But, don’t panic, help is at hand!
For all you down-trodden, over-burdened directors, the Institute of Directors Centre for Corporate Governance at UCD (www.corporategovernance.ie) is there to ease your pain. We offer short half-day courses on governance, in house customised courses for individual company boards, and in September 2004 we are introducing a one-year, part-time Diploma in Corporate Governance.
(I would love to see a student list for these courses. I’ll bet Sean Fitzpatrick isn’t one of them.
Professor Niamh Brennan, is Michael MacCormac Professor of Management, UCD Academic Director Institute of Directors Centre for Corporate Governance at University College Dublin
Copy to:
The baffled Professor
Writing in the Irish Times on Jan 2006 Séamus Mulconroy Progressive Democrats’ director of policy had the following to say about light touch regulation (My emphasis).
IFSC needs light regulation.
If Ireland abandons softer regulation, we will have one of the most stringent financial sector regulatory environments in the world, writes Séamus Mulconroy.
The IFSC has been one of the outstanding success stories of modern Ireland, a public-private partnership that worked, the brain child of entrepreneur Dermot Desmond, backed by the then taoiseach Charlie Haughey.
It transformed an area of disused docklands into a major international financial services. Half of the world’s top 50 banks have Dublin operations. According to the IDA, up to 16,000 professionals work directly in the international financial services sector, and a similar number are employed in support sectors such as legal and accountancy services.
Nor is employment confined to the IFSC, and many IFSC firms have sizable operations across the Republic, including State Street in Kilkenny, GMAC in Mullingar, MBNA Carrick-on-Shannon, Cigna Galway to name but a few.
While the new buildings along the north shore of the river Liffey are impressive, the sheer scale of the operations managed from the IFSC is even more impressive.
The net asset values of domiciled investment funds amounted to €498 billion, while cross-Border life assurance premiums amount to €5.6 billion. The tax revenue to the Exchequer has been equally impressive – in 2002 alone, IFSC companies paid €700 million in corporation tax.
In the early days the value proposition for the IFSC was simple: low corporation tax, a light touch regulatory regime – as little red tape as possible – and an English speaking workforce located in the EU. It was a value proposition that appealed to the international financial services community as attested to by the rapid growth of the IFSC. Just remember that the IFSC was still only a concept in 1986.
However, we live in a constantly changing world and as so many investment products stipulate, past performance is no guarantee of future performance. The IFSC faces many challenges, new competitors are emerging both from within and outside the EU eager to replicate our achievements and frankly to steal our lunch.
The IFSC must adapt to the challenges of the future. The Future Of The Services Sector In Ireland, a consultants’ report prepared recently for the IDA, highlighted some of the opportunities which exist. Just as in the past, having the right regulatory regime will be crucial if we are to seize these opportunities. Recent high-profile scandals in the reinsurance industry in the US and Australia have focused attention on the regulatory regime under which the IFSC operates.
Both Justin O’Brien, director of corporate governance at Queen’s University, Belfast and Liam O’Reilly, chief executive, the Irish Financial Services Regulatory Authority, have both recently written in this newspaper on the issues involved. I do not propose to examine the specifics of the case quoted, but rather to look at the issue of regulation in more general terms.
At the first hint of any scandal, governments and regulators are always called on to act. The cry goes up immediately that something must be done – whether or not that something makes sense or not is another question.
Despite what media commentators always argue, not every scandal requires a government or a regulatory response. Neither government nor indeed regulators should strive to create a risk-free world or a risk-free business environment.
To quote Tony Blair:
“Instead of the ‘something must be done’ cry that goes up every time there is a problem or a ‘scandal’, we make it clear we will reflect first and regulate only after reflection.”
Business is constantly changing and change carries with it new risks. If we seek to pre-empt every risk through regulation, we will simply add to the cost of doing business and drive businesses to other locations.
The essence of business is that investors take risks to gain returns; business without risk would be like the sea without salt.Charlie McCreevy encapsulated the challenge for regulators in a recent speech:
“My appeal to you is when regulating, to give due weight to the need to strike the right balance between prudential and investor protection considerations and the need for competitiveness and innovation in financial services. “Don’t try to protect everyone from every possible accident. Concentrate on the big things that really matter, and leave industry with the space to breathe and investors with the freedom to learn from their mistakes.”
He also forcefully made the point that those mis-sellers and wrongdoers who break the rules must be punished severely.
In an increasingly competitive world, I fear that if Ireland and the IFSC abandon their commitment to light-touch regulation, the result may be that we have one of the most stringent regulatory environments in the world and very few companies left to regulate.
Light-touch regulation does not mean a free for all or the condoning of illegal or immoral practices; it does mean as Charlie McCreevy says striking the right balance between protecting the public and the integrity of the market and stifling business with burdensome regulation and unsustainable costs.
As the Progressive Democrats have found to their benefit, advice from Charlie McCreevy is always worth listening to.
Séamus Mulconroy is the Progressive Democrats’ director of policy.
© The Irish Times. 20th Jan 2006
We are constantly told by politicians that Irish banks have no exposure to the sub-prime virus. In other words we are being asked to believe that Irish banks are the only banks in the world that recognised the very well concealed virus and, unlike all other bankers, had the integrity to resist getting involved in such a dodgy enterprise.
Sometime last week economist George Lee said the following about the financial crisis.
“We’re the people at risk now, we’re the ones picking up this tab…and that’s why I want to know all the details. I want to know what is the real state of financial affairs with the banks, I want to be able to believe them, I don’t blooming well believe them and that’s the damage that’s done.
I feel as an ordinary citizen completely abused by what’s gone on because it’s like they’re taking us for fools. I want the details, I don’t expect the Government to be perfect in their answer …but I think they have an obligation to people not to treat them like thicks, we want to know the details and we’re not stupid, we want to know the truth.”
George, like most people in Ireland wants to be told the truth, he wants leadership, and he doesn’t want to be treated like a fool.
Here’s some of what Finance Minister Brian Lenihan had to say during an interview with John Bowman at the Fianna Fail Ard Fheis
Asked about his comment that he was ‘unfortunate to have been appointed Minister for Finance just as the economy came to a shuddering halt’ he said:
“I wasn’t referring to my appointment as minister in that comment, I was referring to the fact that it was a misfortune that the building industry had come to a halt and it had. And when I pointed that out I was subjected to a great deal of criticism and abuse, the point was I was telling facts.
We have to face up to facts as a country and there’s too much denial going on in relation to our current difficulties.”
This is just a straightforward lie; the minister was referring to his appointment. He was criticised (but hardly abused) for the comment. But in true Fianna Fail tradition Lenihan just can’t face the truth, he has to try and lie his way out of what was really a minor faux pas. Then, again in typical Fianna Fail fashion, he goes on to accuse the rest of us of being in denial.
When it was put to Lenihan that the denial came from him he replied.
“…The idea that we can escape from making a contribution is an illusion. I think that has to be understood by the public fully yet. I don’t blame the public for that because the speed of the deterioration has been very; very rapid…naturally the public are confused and angry about this…”
So, George Lee is looking to be told the truth, not to be treated like a thick and the Minister responds by telling him and the rest of us that the nation (but not Fianna Fail) is in denial, that we don’t really understand what’s happening, (but Fianna Fail does), and that we’re delusional and confused
Bowman mentioned that German Chancellor Angela Merkel said that the EU would consider assistance for Ireland if honest and open reports were forthcoming.
Don’t hold your breath Angela.
Letter is today’s Irish Times.
Madam,
Minister for Transport Noel Dempsey’s attack on those he claimed had committed “economic treason” was entirely predictable, if a little belated. It is part of the strategy of Government leaders to blame international events and a small clique of speculators and bankers for all our woes.
They are being completely disingenuous in doing so and I do not believe the Irish people will be fooled.
The real architects of this economic debacle were the successive Fianna Fáil/PD governments under the “leadership” of Bertie Ahern. We were particularly unfortunate to have as taoiseach a man so lacking in political vision and integrity at a time of great, though transient, wealth. Successive Ahern administrations failed to manage the economy in a sustainable manner. Their ineptitude was staggering.They claimed they wanted world-class public services at the same time as they were reducing taxes. They reduced direct taxes to the lowest level in Western Europe, simply to win elections, and now we find we have an unsustainably low level of taxation, which cannot allow us to even maintain the poor level of public services we currently “enjoy”.
They failed to institute a fair tax regime while giving generous tax breaks to speculators, fuelling the construction bubble. They also established less ethical, though technically legal, tax breaks, which have earned this country the dubious distinction of being compared to Lichtenstein. They were a government of “chancers” led by the “Dell Boy” of European leaders.
They established a regulatory regime which was lamentable, as we now know to our cost. They presided over a scandalous waste of taxpayers’ money by adding layers of Government spin-doctors and advisers, often duplicating the work of civil servants. They appointed cronies to state bodies such as Fás, the organisation of jobs for the boys and junkets for the boys.
They established juggernaut bureaucracies such as the HSE. They built up a level of government spending that was patently unsupportable, based as it was on tax revenues from the sandy foundations of the construction industry and the property market.
All this time we were led by a man who, by his own admission, could not manage his own finances. So how in God’s name could we have expected anything other than the mess in which we are now mired?
Ahern’s decade has seen arguably the worst government in the history of this State, certainly the most morally bankrupt. It has made paupers once again of the Irish people.
The leading figures of these administrations of the past twelve years – Ahern, Harney, McCreevy, Cowen, et al., are the real economic traitors.
Yours, etc,
ALAN McPARTLAND,
Rathfarnham,
Dublin 16.