Category: Civil Service

Politicians – Watch your backs

“We share the same concerns as the ordinary members of the public. We see a few people who are in receipt of huge salaries who have mismanaged and driven our economy and our country almost to the edge of bankruptcy and they seem to be getting off scot-free.

Our colleagues and the ordinary workers out there will for years have to pay for this incompetence through pay cuts and levies and we can’t understand how these people have been allowed to get away scot-free

They receive huge salaries that you couldn’t even dream about and huge bonuses and they are motivated by one thing – greed. And we feel this should be dealt with.”

(Morning Ireland, 3rd report).

Is this Joe Higgins talking, is it a radical union leader, is it a revolutionary student?

No, it’s Joe Dirwan, General Secretary of the Association of Garda Sergeants and Inspectors talking about his members participation in the anti government protest march at the weekend and expressing his deep anger towards that same government for allowing greedy bankers to walk away with the loot.

The message? Politicians, watch your backs.

Words and responsibilities

Last week the powerless Public Accounts Committee published its report on travel abuses within Fás (Irish Examiner).

According to this powerless committee “Fás wrongly allowed executives and board members to travel first class since 1992.”

Use of the soft word ‘wrongly’ here is always interesting. Such words are reserved for dodgy activities within government agencies and financial institutions. When ordinary citizens (peasants?) involve themselves in such activities the words (rightly) used are ‘fraud’ and ‘corruption’.

The ‘responsible’ minister, Tanaiste Mary Coughlin, did what all Irish politicians do in such cases – she abdicated responsibility.

Apparently, she won’t be taking action because the travel details “were arranged and authorised at an official level in Fás”. It is reasonable to assume from this approach that the Minister would have no problem if Fás ‘arranged and authorised’ a bank robbery at ‘official level’.

And let’s not forget that this PAC report was triggered by a report into Fás by the powerless Comptroller and Auditor General. The powerless committee has now recommended that the powerless C & AG carry out yet another investigation based on its report and when complete PAC will carry out an investigation into that report.

No, no, really, I’m not joking but I do feel the first signs of madness beginning to take hold.

A million here, a million there – Who cares?

A typographical error by a government official in 2002 resulted in two barristers employed by the Moriarty tribunal earning an extra €1m over the past six years.

The “typo” seven years ago added €250 per day to the agreed €2,250 “per diem” fee paid to John Coughlan and Jerry Healy, the two highest-earning barristers in all the recent tribunals.

Despite being spotted shortly after it occurred, the mistake was not corrected by the Department of Finance. After legal advice the higher payment of €2,500 was sanctioned, so Coughlan and Healy were paid a higher per diem than any barrister in any tribunal.

The mistake was revealed in the Comptroller and Auditor General’s report published last Thursday.

The Sunday Times

My comments:

What’s to stop civil servants arranging such ‘errors’ across a wide range of departments and splitting the spoils with confederates? Citizens can be forgiven for assuming that such ‘deals’ are common.

Has the senior official in the Department of Finance, who make the mistake, been sacked or promoted?

If senior counsel had been underpaid by a million would the legal advice have been – ‘Tough, you have to suffer the loss?’

If somebody on social welfare was over paid by, let’s say, €50, could they, like the learned gentlemen, (legally) refuse to give it back or would the full force of the State come down on them like a ton of bricks?

Pain for everybody except bankers and the ESB

Ok, just so we’re all clear on the situation. The global economy is going down the tubes, wholesale closure of industry and mass layoffs with countless millions of previously wealthy people facing a very bleak future. Some countries, like Ireland and Iceland in danger of complete meltdown. It’s a crisis on a scale never before known to humanity.

Politicians and a whole myriad of experts are agreed that everybody must feel the pain, sacrifices must be made, all bets are off; everybody must put their shoulders to the wheel – except the banks and ESB. Why?

Well the ESB had a previous agreement written in stone by god himself apparently, so that’s impossible to change and the greedy bankers who got us into the mess in the first place must be paid because, apparently, their bonuses are ‘historical.’

Now, where did I leave that sackcloth?

Who will be the next Financial Regulator?

The Government hasn’t yet announced who will replace Patrick Neary, the incompetent Financial Regulator, who will retire with a lottery sized golden handshake and a massive pension later this week.

While it’s very difficult to predict who the replacement will be I would put money on the present Consumer Director and (I think) acting regulator Mary O’Dea.

The Government might see the appointment of a woman as a ‘radical’ move in addition to the fact that O’Dea is the only senior director that doesn’t have a Central Bank background.

Consumers, however, shouldn’t get too excited if indeed O’Dea is appointed. She’s just as ruthlessly committed to protecting the vermin that infest the financial sector as all previous regulators.

Prime Time carried out a sting operation last May in which they exposed serious mis-selling to the elderly by a number of financial institutions.

According to Ms. O’Dea there was no evidence to suggest there was a widespread problem across the industry but according to the Financial Ombudsman, Joe Meade, the practice is a serious problem.

When O’Dea was asked if the regulator’s conclusion that there wasn’t a serious problem was based on self reporting by the financial companies she said.

“It was based on asking companies at a senior level to examine their files and to look at the details of what they had on a control basis.”

So, the Prime Time undercover sting operation reveals very serious mis-selling and the experiences of the Financial Ombudsman also points to a very serious problem, but the regulator, who politely asks the financial institutions if they’re doing anything wrong, concludes that there’s no serious problem.

That’s the level of ‘regulation’ we can expect if O’Dea is appointed and, to be fair, it will be the same no matter who is appointed to the lucrative position.

Copy to:
Financial Regulator

A corrupt nation in denial

The Financial Times has rightly described Ireland as a banana republic in response to the Anglo Irish Bank scandal. This is part of an ever increasing realisation by the international community that the administration of Ireland is, at every level, rotten to the core.

It is only within Ireland that the reality is denied. It is only within Ireland that a large majority of people including politicians, intellectuals, journalists and business people continue to pretend that Ireland is a normal, functional democracy like any other.

The financial tsunami that’s sweeping the globe is likely to strip away all such pretence and expose us for what we really are – a corrupt nation in denial.

The reaction to the Sean Fitzpatrick scandal and the banana republic editorial in the Financial Times is typical of such denial.

Brian Lenihan, Minister for Finance:

“I don’t accept that claim (Ireland is a banana republic), for one minute; very few countries have been left unscarred by the financial fall-out from the problems initially sparked by US sub-prime lending.
“There is nothing unique in what has happened in this country — and, indeed, we haven’t had all of the failings that have been demonstrated in some overseas banks.”

(Irish Independent, Dec 23).

Actually what happens in this country is unique. No other democracy in the world allows its bankers and other financial institutions to rob customers on a regular basis.

The corrupt and rotten business and political environment in Ireland is, largely, a creation of Lenihan’s party, Fianna Fail.

Shane Ross, Independent Senator:

“It’s a pretty stunning state of affairs.”

(Today with Pat Kenny, 19th Dec).

Actually it’s not stunning at all. This kind of ‘inappropriate’ behaviour has been going on since the foundation of the State. People like Senator Ross, unfortunately, have an amazing facility for getting outraged, forgetting and then getting outraged all over again when the next scandal breaks. He seems unable to join up the dots and see the reality that the Financial Times can see at a glance.

“What has happened here is a complete collapse of financial regulation…What has the Financial Regulator been doing since he became aware of Fitzpatrick’s loan last January?”

Wrong again Senator; there never was any financial regulation to collapse in the first place. Irish governments and regulatory authorities do not regulate but rather ‘facilitate’ the activities of financial institutions.

Last October, for the first time in the history of the State, an Irish financial institution was fined and that was only because it threatened the interests of other banks.

It’s likely that since last January the so called Financial Regulator has been trying to find a way of getting Anglo Irish and Sean Fitzpatrick off the hook. If it wasn’t for the collapse of the banking system Fitzpatrick would have been allowed to continue with his ‘inappropriate’ activities.

This is exactly how a ‘regulator’ behaves in a banana republic.

Gina Quin, CEO of Dublin Chamber of Commerce:

“I think it’s worth remembering that this wasn’t an illegal practice and you know business gets done between friends all of the time because we like to work with the people that we know and like and we can trust.

And trust is a hugely important feature of Irish business moving forward in the current climate. Trust and confidence are the absolute cornerstones of us pulling ourselves out of this current situation.

…the man has fallen on his sword, his fellow director is gone as well who was involved in one of the loans and we’ve got to move on…this is one small unfortunate incident and its not helping, we’ve got to move on.”

(Today with Pat Kenny, 19th Dec).

“This is one small unfortunate incident”???

To be charitable to Ms. Quin, she’s young, ambitious and obviously completely ignorant of the rotten reality at the core of Irish public life. I hope that she manages to remain in her comfortable little bubble world interacting with people she likes and trusts.

Institute of Chartered Accountants in Ireland(ICAI):

The regulatory board of the Institute of Chartered Accountants in Ireland said it’s to look at the circumstances surrounding the director loan issue. It wants to know if any of its members was involved.

Recently, this organisation established an ‘independent’ regulatory board (CARB). Clearly, the ICAI sees regulation as a bit of a joke when we learn that they appointed Dr. Liam O’Reilly as chairman of the board of CARB.

During his career as chief executive officer of the Financial Regulator Mr. O’Reilly enthusiastically enforced policies that ensured no financial institution was ever brought to account for fraud or theft. His attitude is unlikely to have changed.

No accountant will be will be made to answer for the Anglo Irish Bank scandal.

Irish Association of Investments Managers:

The Irish Association of Investments Managers said it’s disappointed at events which have led to both Mr. Fitzpatrick’s resignations and that of the bank’s chief executive officer David Drumm. The association’s members manage 250 billion worth of investments and say they expect the highest level of transparency in dealings by directors of listed companies.

This joke organisation claims to ensure best standards throughout the investment industry. Two names – Jim Flavin, Sean Fitzpatrick.

Mary Hanafin, Minister for Social and Family Affairs:

When Hanafin was asked why couldn’t the Government make such loans illegal she spluttered

“Mmm…, Obviously, all sorts of arrangement and mmm…dealings that banks make, you know, and I think the regulator, the regulatory authority rather is actually looking to see what was behind that and the whole circumstances of it.”

(Saturday View, 20th Dec).

Hanafin went on to talk about the Fitzpatrick scandal as if she was a tourist from Mars and not part of the political establishment that created and supports rogue bankers.

Prof. Ray Kinsella, Director of the Centre for Insurance Studies at the Quinn Business School, UCD:

“This crisis has brought a generation to its knees…the impact on the very fine people working in the bank…the impact on Sean Fitzpatrick himself, I know it’s an unpopular thing to say but I’m uncomfortable with judgementalism and I don’t know all the facts but the impact on the Irish economy and financial system has been devastating.”

(Saturday View, 20th Dec).

The best that can be said of the professor is that he’s a bit of a header (See here). He once suggested that the Irish media should keep quiet about banking corruption as such talk could damage our international reputation. As I say, he’s a bit of a header.

Professor Niamh Brennan, Michael Mac Cormac Professor of Management, Director of Academic Centre For Corporate Governance, UCD:

Commentating on the failure of the Financial Regulator, Patrick Neary, to act on Fitzpatrick’s dodgy activities.

“I had thought it was a member of the staff that had made the discovery and hadn’t escalated to the Financial Regulator himself. But it appears that he knew and I find it absolutely extraordinary that he would have been part of those all night discussions in the Dept. of Finance and told nobody about this finding.”

(The Sunday Supplement, 21st Dec).

Professor Brennan is shocked because she, like many others in Ireland, labours under the illusion that the Regulator actually regulates, it does not. The Regulator, the Government and the banks are all in the same camp.

“What we need in Ireland is a robust system of regulation that protects the reputation of the country as a whole and which will be good for our citizens.”

As I have said, the Regulator, Government and the banks work closely together for the good of the banks and against the interests of the country and its people. The completely one sided deal done with the banks makes this fact crystal clear.

Unlike most commentators, including politicians, who immediately and without question accepted the regulator’s opinion that nothing illegal occurred, Professor Brennan believes that Fitzpatrick could be brought to account as follows.

Breach of fiduciary duties where a director puts his own personal interest ahead of the company.

Failing to keep accounting standards by not telling the truth in his financial statements.

Moving the loan was, in Professor Brennan’s opinion, illegal.

Fitzpatrick will never be brought to account for any wrong doing.

Ulick McEvaddy, businessman:

“I’ve seen this corporate madness if you like in a media frenzy to feed off any troubles that an Irish corporation would have.”

“So these people, Sean Fitzpatrick, Bill Barrett, these guys had a different philosophy in life and they to a great extent were, with Charles Haughey, another man pilloried in the media, the architects of this Celtic Tiger.”

(Marian Finucane Show, Sun 21st Dec).

My respect for McEvaddy completely evaporated on hearing this drivel. To blame the media for Fitzpatrick’s dodgy activities is bad enough but to defend the corrupt Haughey by claiming he was a victim of a media frenzy is to expose oneself as an ignorant fool of the worst kind.

David McWilliams, Economist and author:

For some time now McWilliams has been telling all and sundry what action needs to be taken in response to the collapse of the banks. But the Government have ignored his very sensible suggestions especially his insistence that the ‘financial delinquents’ who created the mess should all be sacked.

Responding to the dodgy deal done between the Government and the bankers McWilliams uses some colourful but accurate language.

“Recapitalisation is based on the economics of Noddyland.”

“Cronyism of the highest order.”

“Sends a signal to every foreign investor that Ireland is a banana republic.”

“Stroke politics” of Congolese proportions.”

(Irish Independent).

Unfortunately, McWilliams falls down in his analysis when he concludes that Brian Lenihan must be acting under very bad advice.

McWilliams, like so many other experts and commentators, persists in assuming that the Government and the Regulator are acting in the interest of the country when it is crystal clear that they are doing no such thing.

The Government, the Regulator and the banks are all on the same side, all working to an agenda that does not include the best interests of the people of Ireland.

Pat Cox, former president of the European Parliament:

I quote Mr. Cox extensively because his views are so disturbing.

Pat Cox is a highly intelligent and vastly experienced public figure. In addition to serving as President of the European Parliament he has served as an MEP, TD and broadcaster.

It is therefore deeply disturbing to witness him in full denial mode. Effectively, Cox is saying – Nothing illegal was done, Ireland is only a minor player when it comes to financial corruption and it’s just a case of some bad judgement and lax governance.

It’s difficult to believe he’s ignorant of the fact that Ireland is the only Western democracy that protects rather than prosecutes bankers who may be corrupt.

We here at Public Inquiry could quote hundreds of cases of political, financial and government corruption in support of the Financial Times accurate conclusion that Ireland is a banana republic.

Here’s what Cox had to say on the Fitzpatrick scandal.

“You asked the question at the very beginning; what about the comments in the papers about Ireland’s reputation?

If you look at the Tsunami of toxicity and greed that we have seen from Wall Street in all of the collapses and from the City of London, Ireland, I’m not relativising here (he is) but Ireland is really not king pin in this.

So those in the Financial Times editorial board or others who would cast a stone should cast them at glass houses closer to their headquarters at home. That’s the comparative point I wish to make.

Secondly, this week, we’re not discussing for example Mr. Madoff, one of the great guru’s of Wall Street who appears somehow or another by a corrupt scheme of pyramid selling to have maintained a system that finally has collapsed possibly with a debt of $50 billion.

So again, not to relativise, (he goes on to relativise) that’s real and that’s this week and it’s not in one Irish newspaper this weekend and a missing ingredient if we want comparative analysis.

I think the issue of what happened at home is an issue that touches loads of stories this week, it’s a question about people in authority, it’s a question about judgement, it’s a question about standards, it’s a question about transparency and it runs across so many stories in our papers today.

And the question about Sean Fitzpatrick is not one about legality and illegality to do with the bank giving loans. Under Irish company law it is very clear that up to ten per cent of the net assets of a business can be under law loaned to directors. Indeed, prior to earlier this decade up to a 100% could have been loaned.

So, the law is not the issue, the issue is the quality of governance, this is someone who has been the chief executive of one of the burgeoning banking institutions of this state and subsequently since he retired in 2004 the chairman.

And in that regard hiding the loan from the shareholders of his own bank, that’s the first grievous fault before we come to the public in some general prurient or other interest that they may have in this story.

It wasn’t leveling with shareholders and I only ask the question – Why not. It wasn’t illegal as has been said so why not tell it. So, there are people in the bank who made personal judgements not only one but several that it was ok in governance terms to hide this truth from their own shareholders maybe or not from their own auditors and they did it over consecutive years and it begs the question why.

Sure, not illegal but certainly well below the standards of good judgement and good authority and confidence is one of the missing ingredients in the global banking system today and in the Irish banking system and this is another heavy weight on those whose shoulders should bear the responsibility including our regulatory system.

The cosy capitalist bit or the Irish bit that I find quite disturbing is that those who have been invited to regulate appear themselves to be asleep at the wheel and so those who are there to look out for a stakeholders interest, whoever it may be, appear to have produced a less than acceptable performance and I find it really interesting that several of the newspapers today report our finance minister Brian Lenihan as not offering directly his confidence in our regulator saying this is a matter for the board and not for him.”

(Marian Finucane Show, Sun 21st Dec).

In conclusion:

The Financial Times is correct, Ireland is a banana republic. It is a corrupt state not just because of the extent of corruption throughout every level of society but more critically because of the complete failure of state agencies, including the body politic, to take effective measures to root out the disease.

This inaction has led to the State itself becoming a corrupt entity which in turn has created an environment where politicians, businessmen and many others in privileged and powerful positions can, with supreme and justified confidence, break the law with impunity.

This is the crucial difference between Ireland and other Western democracies. When corruption is uncovered in countries like America, England and France, for example, there is an immediate and robust response from well funded, professional and independent enforcement authorities. This does not happen in Ireland.

Ireland’s reputation will continue to be damaged for so long as politicians, journalists, intellectuals, business people and the bulk of ordinary Irish citizens continue to deny the reality of the situation.

Copy to:

Brian Lenihan, Minister for Finance
Shane Ross, Independent Senator
Gina Quin, CEO of Dublin Chamber of Commerce
Institute of Chartered Accountants in Ireland (ICAI)
Irish Association of Investments Managers (IAIM)
Mary Hanafin, Fianna Fail TD and Minister for Social and Family Affairs
Professor Kinsella, UCD
Professor Niamh Brennan, UCD
Ulick McEvaddy, businessman
David McWilliams, Economist and author
Pat Cox, former President of the European Parliament
Financial Regulator

FÁS chief gives people of Ireland the two fingers

Former chairman of FÁS Brian Geoghegan doesn’t mince his words when it comes to giving two fingers to the people of Ireland (RTE News, 7th report).

The fat cat bureaucrat told the Public Accounts Committee, and by extension the people of Ireland, he was not aware that first class travel had been availed of by FÁS executives. Furthermore, he told the people who pay his massive wage that neither he nor his board were responsible for checking details of travel.

I’m surprised he deigned to talk to us at all.

Defending a failed state

After reading a report that the principal witness in the ongoing FAS scandal, Greg Craig, had refused a third ‘invitation’ to appear before the Dail Public Accounts Committee I rang PAC and spoke to a senior civil servant.

“The PAC has compellability powers, why doesn’t PAC compel Craig to give evidence?”

“PAC can get compellability powers but it’s quite difficult to get them, it takes a long time to get compellability powers.”

“It was vital for our examination that he comes in; we have enough information of what went on in FAS at the moment. Mr. Craig had an opportunity to put his side of the story because he was mentioned, as is his right, because there are allegations of wrongdoing. If he chooses not to do that then we’ll have to go ahead on the basis of what the findings are so far through the Comptroller and Auditor General.”

“I’m not interested in Mr. Craig’s difficulties; I want to know what happened to my money.”

“We know what happened from the C & AGs report and at the end of the day we want the C & AG to go back and conduct a more thorough investigation of FAS which he’s doing in January and we can’t be seen to be holding up that so we gave him the invitation.

It’s up to him if he wants to take it up, if he doesn’t we’ll just go ahead with the findings and the evidence we’ve taken so far. We know what went on, we know exactly what went on, we’ve got huge amounts of material from FAS and they have admitted what went on there in terms of what was wrong.”

“What power does the PAC have in regard to referring these matters to the Guards or the Fraud Squad?”

“That will be something we’ll look at; some of these matters have been referred to the Guards already.”

“I’m asking what powers PAC has at the moment.”

“We can make recommendations to the Minister for Finance and it goes back to the department of Enterprise as to what should happen but it’s not specified in our powers. All we can do is refer things to whoever is the regulatory authority.”

“What power does the C & AG have to refer these matters to the Guards?”

“The C & AG is an auditor but if he comes across something that’s criminal in nature he has to report it to the Gardai.”

“So, the PAC has no power, the C & AG has no power.”

“Well, I didn’t say they have no power.”

At this point the civil servant got angry with my questioning and proceeded to give me a dressing down.

I listened politely and responded by informing him that I was not ringing him on a whim but rather as a very angry citizen looking for answers.

I repeated my assertion that the PAC and C & AG have no powers apart from referral and recommendations.

“Yes, that would be correct.”

“Have any recommendations made by the PAC ever being referred to or acted upon by the Guards?”

“I don’t know, I couldn’t say. The PAC has been examining government bodies since 1924.”

“Do you find it odd that the C & AG has already investigated FAS and made a report?”

“He has looked at a report they’ve already made (FAS?) but this needs to be done in forensic detail??

“Could I outline the broad sequence of what has happened to date?”

“An anonymous letter was sent to Mary Harney which triggered an internal investigation in FAS which triggered an investigation by the C & AG which triggered an investigation by the PAC and when the PAC completes its investigation in January it will refer back to the C & AG who will conduct yet another investigation (This is where I get facetious) who will refer back to FAS who will refer back to Mary Harney who will refer back to the anonymous letter writer thus completing the circle of madness.”

The civil servant confirmed my sequence was correct up to the point where I became facetious.

I thanked him and told him he was doing a great job in defending a failed state.

Irish journalist treated roughly by FAS?

I heard a report that Niall O’Dowd, the New York based publisher of the Irish Voice, was very supportive of the disgraced FAS chief Rody Molloy. According to O’Dowd, Molloy ‘did the State some service’.

That phrase, associated with the corrupt Haughey, always gets my attention but I was puzzled about what possible connection O’Dowd could have to the scandal.

All was revealed in an excellent article by Maeve Sheehan in the Sunday Independent. It seems that O’Dowd is one of the legions of freeloaders who have benefited from the generosity of Irish taxpayer’s on the FAS gravy train.

O’Dowd couldn’t recall if a flight from New York to Houston Texas was paid for by Irish taxpayer’s but, reassuringly, he tells us he didn’t travel business class.

“Frankly, it was a very modest trip. We had dinner at a restaurant near NASA, not a fancy place, and another dinner at an Irish pub.”

What? I’m shocked, such shoddy treatment. Surely this man deserves compensation – an all expenses paid, round the world holiday perhaps?

FAS scandal – Entering phase three

The FAS scandal has now moved into phase three.

Phase one was the denial by Tanaiste Mary Coughlin that there were any serious questions to answer.

Phase two was the uncovering of the real story by the media, so called State authorities don’t do investigation/accountability.

Phase three requires a fall guy to avoid the risk of real accountability.

The Government makes an offer to Molloy that he can’t refuse – resign with full pension and entitlements or we’ll screw you into the ground.

Molloy has only two years to do before official retirement, time to take the money and run, time to abandon any pretence of serving the people. In return for his betrayal of the State he will receive high (but dishonest) praise from Government ministers for his ‘loyal and honourable’ service to the country.

As he legs it out the door with his bags of money and fat pension his ears ring with the last order from his political masters:

Don’t even think about playing the hero by appearing before the Public Accounts Committee’.