Category: Corporate

Betting on the future of humanity

Many years ago I came to the conclusion that, as a species, humans are doomed to self destruction. The only question is; will we take the rest of nature down with us.

The seemingly unstoppable destruction of the environment, on which we depend for our very existence, was the principal reason for my pessimistic conclusion but recent events on the global financial market have added to my despair.

When the Murdochs were being quizzed before a Parliamentary Committee a television channel was simultaneously broadcasting a live graph indicating how the markets were responding to the event.

So when Murdoch Snr., for example, said something negative the graph took a tumble but when Murdoch Jnr. gave a positive answer the markets shot up again.

When Murdoch’s wife leapt to his defence after he was attacked by a pie wielding assailant the markets went up. The television commentator explained that the markets were probably impressed with her gutsy response.

This is an absolutely insane way to run a planet but that is the frightening reality.

Just two individuals, out of the seven billion that inhabit the planet, can have devastating effects on the fate, happiness and prosperity of countless thousands by uttering a simple sentence like:

This is the most humbling day of my life.

The fate, happiness and prosperity of billions of people, businesses, countries and even the very stability of the planet itself depends, to a large extent, on a tiny group of people betting on how events might effect their profits, it’s like playing Russian Roulette with five bullets in the chamber.

We witness some of the most powerful people on the planet responding to the current crisis with pathetic pleas to the market. Please believe us, you’re being unfair; tell us how we can please you.

What’s required, of course, is a completely new global system that allows people to prosper, to make all the money they want but without endangering the entire planet – in other words, a strictly controlled capitalist system.

And, of course, the on-going financial crisis will have devastating consequences for the environment because the only solution being proposed to resolve the crisis is – growth, growth, growth and more growth.

This means that even the modest measures taken to date to slow down environmental destruction will be abandoned so that the looting of the planet’s very limited resources can continue to generate profits.

Celtic Tiger to follow the Asian Miracle?

The first of a very interesting three-part series, All watched over by machines of loving grace, was broadcast by BBC 2 last Monday (9.00pm).

The programme analyses the idea that humans have been colonised by their machines.

Last week’s show focused on the part played by computers in global finances and, as an example, analysed the rise and fall of the Asian Miracle, a property boom almost identical to that in Ireland. It made for chilling viewing.

When developers defaulted on their loans Western investors panicked and rushed to take their money out of the countries involved.

The IMF eventually intervened with massive loans to stabilise the situation but at a price. The countries involved were forced to turn themselves into models for the Free Market which meant cutting government spending and getting rid of corruption and nepotism in the ruling elites.

Unfortunately, the IMF programme only worked in the short term. Eventually, currencies collapsed, in some cases, losing up to 80% of their value. Economic ruin led to rioting and looting bringing some states to the brink of anarchy.

The principal aim of the IMF intervention was, apparently, to rescue Western investors, not individual countries. The bill was, ultimately, placed on the shoulders of ordinary and mostly poor taxpayers.

Prices soared as economic output plummeted resulting in millions falling back into the poverty they thought they had escaped forever. The crisis triggered widespread ethnic and religious strife.

The parallels with Ireland are obvious; it’s just that we haven’t yet reached the end of our particular road.

The countries involved were very angry with the way they were treated by the IMF and Western investors and have pledged never again to allow themselves become the victim of such naked greed.

The resources of these countries are many multiples of those available to Ireland so they are likely to succeed in their ambition to determine their own destiny.

Ireland has few resources, is still hamstrung by a deeply corrupt political/administrative system and is desperately vying for crumbs from an increasingly crisis ridden EU economic system.

We are, as Morgan Kelly predicted, more and more dependent on the kindness of strangers.

White collar crime does not (officially) exist in corrupt states.

Mr. Justice Peter Kelly was probably in his chambers going over the application from the Office of the Director of Corporate Enforcement (ODCE) for a six month extension to the investigation into Anglo Irish Bank when the truth suddenly dawned on him.

What the hell is going on, he probably thought, this is the 6th application for an extension to this investigation and feck all has happened.

And what about all those other cases that I and other judges have sent to the prosecution authorities with strong evidence of criminal wrongdoing, sometimes with outright admissions of guilt and nothing, absolutely nothing has happened?

Welcome, Justice Kelly, to Public Inquiry. Allow me to explain what’s going on.

In functional democracies serious allegations of white collar crime similar to those made against Anglo Irish Bank are dealt with immediately by the police and courts.

They are not side-lined off into decade’s long tribunals, handed over to virtually powerless agencies like the ODCE or those involved given the option of answering a few polite questions before a completely powerless government committee.

In dysfunctional democracies like Ireland allegations and suspicions of white collar crime are permanently parked, delayed until they become historical or, in many cases, simply ignored.

The most effective strategy, whether intentional or not, of protecting white collar criminals is delay and it is obvious that this is what is happening in the Anglo Irish Bank case. It is this strategy that has so upset Judge Kelly.

Another very effective strategy is constant but never acted upon assurances that action is being taken to make sure this kind of thing never happens again.

That’s why when I first read about the latest delay in the Anglo case I thought to myself – it won’t be long before some state agency issues a statement assuring everybody that action is being taken.

And sure enough, the very next day, the Financial Regulator issued a statement warning banks that Big Brother is watching, that from now on there was going to be very close supervision of banking activities.

I have been listening to such official drivel since the early 1980s.

How, you may well ask, was the FR able to react so quickly? Well, it’s simple.

The latest ‘get tough’ warning was actually issued last March and, probably, to reassure Judge Kelly and help ODCE get their extension, the same mush was regurgitated.

The bottom line is simple; white collar crime does not (officially) exist in corrupt states.

Upward only rent law: All clear now

I had always been puzzled by the upward only rent law, I thought there must be some reasonable explanation for such an apparently unfair law.

All became clear on the Frontline last Monday as Ann Hargaden, of Lisney’s Estate Agents, literally squirmed in her seat as she tried to justify this law.

If this law is changed, she warned, it will have devastating effects on international investors coming into Ireland to buy property from NAMA.

When that argument failed to convince Hargaden’s line of thought became even more bizarre.

Think about it, she argued. Who’s going to be hurt by this? (if the law is changed to allow rents to go down). The taxpayer, she triumphantly declared, will pay.

The taxpayer is now the landlord. The taxpayer owns the banks, the taxpayer owns NAMA. If property depreciates in value it’s the taxpayer who will suffer.

So it’s all clear to me now.

The upward only rent law is a scam put in place by our corrupt political system to protect and enrich those involved in the property market at the expense of taxpayers.

Moriarty Report: First reactions

The first and most important thing to be said about the Moriarty Report is that nobody will be made accountable. This, of course, is no accident.

While tribunals have power to produce facts they are specifically prevented from bringing the guilty to account. Any subsequent police investigation is barred from using evidence uncovered by the tribunal. In other words, they must begin the entire investigation again without any assistance whatsoever from the tribunal report.

Of course, there will be no Gardai investigation; Irish police do not concern themselves with the activities of politicians or white collar individuals, it’s a well established tradition.

Now that the report has been published we will move into the next phase – discussion.

Just as tribunals are designed to sideline proper investigation into serious corruption and the ban on police using tribunal evidence has the effect of protecting the guilty, national discussion, conducted through a largely captured media, is designed to allow everybody to indulge in the great Irish tradition of pretending that Ireland is a functional, democratic state.

Miriam O’Callaghan set the ball rolling tonight on Prime Time by asking a question she has asked on countless occasions in the past concerning an endless line of previous scandals – Do you think there will be criminal charges?

Pat Rabbitte, just like dozens of politicians before him intoned in a sombre voice, well I hope so.

Gay (Mad) Mitchell suggested that Mary Robinson should investigate the tribunal report, picking out those parts which, in her opinion, could be forwarded to the DPP.

So, an investigation into an investigation to be forwarded to another state agency for yet another investigation, sounds familiar.

The absolutely critical factor in all this farce is – never, ever allow reality to impinge on the delusions of the nation.

NAMA fails to deny very serious allegations

On the 27th January last Fianna Fail Senator Mark Daly made a series of very serious allegations on Today with Pat Kenny against the National Assets Management Agency (NAMA).

The allegations are as follows:

That NAMA is breaking the law by failing to hold pubic auctions or competitive tendering for the sale of public assets within its remit.

That NAMA is allowing some properties to be sold back for virtually nothing to the original owners.

That NAMA is facilitating a scam of monumental proportions whereby friends of the original borrowers are putting in false bids for assets thus preventing Irish taxpayers from obtaining the maximum value from the assets.

That the scam is happening wholesale and without any transparency whatsoever.

That the scam, although widely known about within official circles, is being ignored by the authorities.

That within the next six months the best properties will be cherry picked by the ‘scavengers and vultures’ resulting in a very serious loss for Irish taxpayers.

The following is NAMAs response to the allegations:

It (NAMA) had addressed this extensively at the Public Accounts Committee. We would ask any other person to advise us of incidents where they think this may be happening. For our part NAMA is determined to avoid such developments in so far as it can within the law as passed by the Oireachtas.

This infantile (non) response contains one crystal clear message from NAMA – We cannot deny any of the allegations made against us.

Pat Kenny ended the interview by saying:

We can talk about this but we cannot point the finger until we have chapter and verse.

This, of course, is ridiculous, the finger has been very clearly pointed. The allegations are extremely serious, they have been made by a public representative on live radio.

In a real democracy state authorities, including the police, would by now be conducting an investigation with the aim of bringing charges.

In Ireland – Nothing.

This scandal has all the hallmarks of previous scandals such as DIRT and Ansbacher where state authorities were fully aware of what was going on but chose to ignore events.

It proves that despite everything that has happened in the past two years nothing has changed.

For the record I have transcribed the full interview (with some minor editing) with my own comments and emphasis.

Today with Pat Kenny – Thursday 27TH January 2011

Pat Kenny: (Introduction)

It has been claimed that people who owe hundreds of millions of Euros to the banks are buying back their debt at rock bottom prices through third parties and off shore companies. Fianna Fail Senator Mark Daly claims some property is being sold back for virtually nothing to the original owners and that NAMA is not following legislation enacted by the Oireachtas.

Kenny: Exactly what are you alleging?

Senator Daly: It’s not so much an allegation as a fact. Under the NAMA legislation, section 25 of the Act, NAMA had to prepare a code of conduct for the disposal of bank assets within three months of the passing of the Act. The Act says that the sale of properties and assets including bank loans would be governed under the Code of Conduct for the governance of state bodies which was passed in 2009.

In that section 18 said any asset being sold to all the bank loans would have to be sold by auction or competitive tendering process.

Kenny: So we would all know about it?

Senator Daly: So we would all know about it. But the competitive tendering or public auction would obviously involve huge amount of advertising that we would see in all the property supplements but this doesn’t appear to be happening either. What appears to be happening is people who are in the know, the same people who are in the know who got us into all this trouble are aware through the banks, through the receivers what these assets can now be bought at, the haircuts.

In one particular case I’ve come across in the UK the original loan was twelve million, the haircut was six million but the asset itself was undervalued, was worth nine million really and the guy, the original borrower of the loan said to his friends; you pay the banks six million, they’ll be happy and we’ll sell it for nine and they made a nice three million Euro profit.(This is a serious allegation).

And that type of thing is happening wholesale because there’s no transparency.

Kenny: But why would NAMA want to do that, if the thing is worth nine million why wouldn’t they sell it for something approaching that?

Senator Daly: Because no one is trying to maximize the value because once the bank gets the haircut that NAMA imposed on them…(Interrupted).

Kenny: Of course, if NAMA impose a haircut and say this asset is only worth six million and it’s actually worth nine, if they have done that then they’re exposing themselves as having undervalued the property which means that they’re not being very professional about what they’re doing. (Extreme understatement).

Senator Daly: There’s a lot of shady behaviour going on here (VERY SERIOUS ALLEGATION) and if they follow their own rules as set out in the NAMA legislation and had a competitive tendering process or public auctions then they would maximize the value but what is actually happening is, and the banks and receivers have admitted this to me, that the banks have said look once we get what we paid for, the haircut from NAMA, we’re happy.

Kenny: This is utterly; utterly dishonest if that’s what NAMA are at. If NAMA, and I’m only saying if, if NAMA is applying a haircut that is greater than the haircut that the market would suggest it should have then NAMA is not doing its job properly.

Senator Daly: All the receivers, auctioneers and banks want to do is pay back NAMA the money that’s owed. Maximising the value is not really their concern.

Kenny: As a taxpayer it is our concern.

Senator Daly: It is our concern which is why the transparency that I’m looking for. First for all that the rules would be followed, that the law would be followed (Serious allegation).

Kenny: That it would be by public tender or public auction.

Senator Daly: Exactly, and that all the banks and the receivers would go through this process but they’re not even doing that because as you can see you are not looking at papers full of advertising saying NAMA property for sale (Serious allegation).

Kenny: What interests me more, they should do that and that’s something they’ll have to rectify not that you have pointed it out, but what is more sinister is that if they applied a haircut that is too severe, rather than the medium term or long term economic value of the asset which they would be in a position to hang onto because that was the idea they could hold it in a way that the banks felt they couldn’t because of their balance sheets, NAMA could hold it longer.

But if they’re just dispatching stuff to get cash in to show off how well they’re doing for instance but they applied too severe a haircut which means the taxpayer has to put more money into the banks which we didn’t need to do and that is the obscenity if it’s true.

Senator Daly: Well, the obscenity of it is on top of that, the banks once they’re quite happy to get the money that they owe NAMA aren’t going to go after the borrowers, the original borrowers for the balance of the money, they’re just not going to do it and receivers, talking to the banks, have admitted that to me (Serious allegation).

The problem with this is that I’m not an investigator, I’m not the Guards but then again we know of plenty of cases where it’s taken two years to bring people to court for very obvious corporate governance issues.

Kenny: Let’s point this out carefully. NAMA, was expected to make a profit, that part of the whole thing that at the end of the day it might turn a small profit. It was not expected to turn a profit in the short term, it was supposed to hang onto to assets and realize the value. If it’s selling them at under the market value, disposing of them just to get cash in then it is not doing the job for which it was established.

Senator Daly: Let’s be clear on this. When the banks are appointing auctioneers and receivers to realize the money the fault lies with them in that they’re not advertising at a very minimum the property for sale and saying; this is what’s available, this is the current bid that’s on it. The transparency is required because first the citizens and the taxpayers are entitled to know that the assets which they currently own through NAMA are being maximized in value and that is not happening (Serious allegation).

Kenny: And NAMA, if it wants to, like in any commercial auction or tender, they can have a reserve, if it doesn’t meet the reserve, if they feel they’re being scammed in some way…interrupted.

Senator Daly: No, what is actually happening is the original borrowers, in these cases that have been brought to my attention, are arranging for their friends to put in the bids. Nobody else is aware that this place is for sale because no one else knows that the original borrower and the asset is in trouble and therefore this is a scam of monumental proportions (Very serious allegation).

Kenny: NAMA has responded to your claims.

It had addressed this extensively at the Public Accounts Committee. We would ask any other person to advise us of incidents where they think this may be happening. For our part NAMA is determined to avoid such developments in so far as it can within the law as passed by the Oireachtas.

Senator Daly: Now that’s not exactly encouraging, is it? Please come to us with a file that we can send to the DPP. What we’re talking about here is the transparency required and they’re not even following section 35 of the NAMA Act to this must be open and transparent. The concerning part about all this is in the next six months the cherry picks, the best property are going to be bought up by the scavengers and the vultures (Serious allegation).

Kenny: You have not gone public on the particular deals that you are aware of, have you gone to the Gardai with them?

Senator Daly: The problem here is you need smoking guns; you need evidence, emails, cheques, money going over, phone calls. This is all quiet little chats in the corner over a pint. The guy who came to me on this had been approached at a dinner party to be the third party to buy a property in the UK and he would then be given a cut. He came to me because he was so disgusted that the same people who had gotten us into this trouble in the first place are now doing the same thing again (With the assistance of NAMA/the state?).

Kenny: Look, if this scandal is real, the people who are culpable, if these things are being sold to private equity funds or whatever, the valuers are the corrupt people because they’re saying this thing is worth six million to NAMA and then it’s being sold on for nine?

Senator Daly: The legislation says you must have an auction or tendering process and therefore it is now illegal to be selling any asset, the disposal of all these assets, the two billion that has been disposed so far, hasn’t been done properly (Very serious allegation).

This practice is so widespread that embassy staff know about it and it’s on the dinner party circuit around Dublin and elsewhere it is quite well known that there are fellows that are cutting deals.

Kenny: We can talk about this but we cannot point the finger until we have chapter and verse.

Senator Daly: The law should be followed; it should be done by tendering or public auction. The NAMA website should have all the assets, the loans that are up for sale, what they were originally bought for, what the current bid is and no asset should be sold within four weeks of it going on the website that way no one can say there was a scam, there was a deal done.

At the moment we’re not following the law.

Senator Daly: In the next six months the guys who caused all the trouble are going to make billions off the taxpayer because they’re buying property at less than the asset value because they’re arranging for their buddies to put in false bids and they’re buying it for less than the market value (Serious allegation).

Copy to:

Today with Pat Kenny
Senator Daly
NAMA
NTMA
ODCE
Dept of Finance

Simon Kelly: Obnoxious, obscene and puke-provokingly sickening

It’s good to see that at least some journalists are beginning to express appropriate rage for what has been done to our country and to identify those responsible.

Carol Hunt, writing in the Sunday Independent, does not mince her words in her assessment of failed property developer Simon Kelly.

Some quotes:

Every single person I’ve spoken to this week begrudges you your big house (an old rectory set in five acres), your five properties you collect rent on in Liverpool, your €80,000 income and the fact that you can send your kids to expensive private schools and make the rest of us pay for it.

Every family that fears losing, or already has lost, their home resents the fact that you got away with your “spousal asset transfers” when you asserted,

“My house is in my wife’s name. There are reports that developers are transferring homes into their wives’ names. Any smart developer would have done that right from the start.”

Ultimately, we resent the fact that you don’t seem to realise that what you’re doing is disgusting, immoral and pathetic. And yet you’re still moaning. You complain that Nama (that’s us, Joe Public), which you’re into for about €200m, isn’t paying you a salary despite you submitting a ‘business plan’ to it. You’re “in limbo”, you say.

You’re not in limbo, Simon, you’re in fucking La La Land and so are the people who let you, and all the others like you, get away with this sort of shit.

And hearing about smug gits like Simon who are allowed to ruin the lives of so many people and yet maintain their own exalted standard of living doesn’t help.

What sort of insane, upside-down banana republic are we living in at all?

A reader from Kerry responded in the letters page:

In her excellent article on developer Simon Kelly Carol Hunt wrote that what he is doing is “disgusting, immoral and pathetic”. I want to add the words “obnoxious, obscene and puke-provokingly sickening.”

And I want to add the words ‘chronically stupid’ to the failed developer’s list of characteristics.

Most of those responsible for destroying our country have wisely kept their heads down particularly in very recent times as ordinary citizens begin to realise the full horror of what has been done to them.

Not scumbag Kelly though, he’s taking every opportunity he can to insult ordinary Irish citizens (his victims) who are being forced to pay for his greed, arrogance and stupidity.

Sheriff Lenihan feeding the journalists

NAMA to go after homes of wealthy developers. (Cowen and Lenihan reject plea to spare family houses).

Cowen ignored lobbying by CIF for builders.

It’s right to seize developer homes

The above three, tough talking, headlines from yesterday’s Irish Independent give the impression that the Government are going all out to deal with those nasty property developers, that the wealthy are not being let off the hook at the expense of the hard pressed taxpayer.

And that, of course, is exactly the purpose of the propaganda which, as always, is gratefully lapped up by naïve journalists.

Government ‘sources’ feed journalists the story that NAMA will move to seize the personal assets and houses of property developers in the best interests of the taxpayer.

The tough talking, no nonsense sheriff, Brian Lenihan, even included a provision in the NAMA Act to pursue developers who transferred their assets to their wives or children in an attempt to avoid paying their debts.

Alas, it’s nothing but the usual waffle designed to fool long suffering taxpayers (and journalists) as the following quote demonstrates.

However, the NAMA Act does state that nothing in its provisions will interfere with the 1976 Family Home Protection Act, which prohibits the sale, mortgage or remortgage of a family home in Ireland without the express consent of both spouses.

That may make it harder for NAMA to take away family homes from property developers with large debts.

Turning corners or a circle of disaster?

Halleluiah, praise the lord, wonder of wonders, we have – yet again – turned a corner.

I say ‘a’ corner because I’m not sure whether Brian Cowen’s corner is the same as Brian Lenihan’s or indeed the same as the many other corners we constantly seem to be turning.

I’m not an economist, just an angry observer so the following ramble may be a complete misinterpretation of what’s going on.

We have just handed over another two billion to Anglo Irish Bank. The handing over of this money to this bankrupt bank is, quite literally, no different from throwing it into a furnace.

This money immediately becomes part of the national debt so, for many decades to come, Irish citizens will be paying back every cent in successive budgets.

And remember, the Government is standing by with at least another 8 billion to throw into Sean Fitzpatrick’s furnace.

With hardly a murmur of comment the guts of a billion was spent last week to recapitalise (nationalise) EBS.

The cost of just these two events completely wipes out the savings planned in the next budget. The Government is scrapping the bottom of the barrel looking for ways to squeeze more and more out of taxpayers who have little left to give.

The gap between what the state spends and what it takes in is over 18 billion and increasing by about a billion every month. For me, the figures just do not add up.

The Government is getting great praise from abroad for its slash and burn policies and politicians and naive commentators are lapping it up but how much more can the Irish people take?

I believe that if Irish citizens continue to allow themselves be stripped of everything they own they will be reduced to a quality of life similar to that of the 1940/50s.

Even that would be a manageable situation if the country was led by honest, courageous and visionary politicians. But the political system is corrupt and rudderless, there’s billions owed on personal loans and credit cards and at least 70 billion owed as a result of the bank bailout.

It seems to me that for this government’s polices to work Irish citizens will have to accept living in absolute, grinding poverty for generations to come – how likely is that?

I don’t believe we’re turning corners, it’s more like we’re going around in a circle and that circle is sinking rapidly.

But then again I could have slipped into a parallel universe two years ago and am now living under the delusion that catastrophe is staring us in the face.

Hopefully my escape from this delusional world is – just around the corner.

ODCE: Still trying defend the indefensible

The Director of Corporate Enforcement, Paul Appleby, is still desperately trying to convince anyone willing to listen that his office served the public interest in the DCC/Flavin fraud case.

The point of a High Court inspection is to get to the bottom of things. That was achieved with the inspectors’ report.

He essentially concluded that there was no deliberate wish to evade the law.

We obviously accept that. We felt, and still feel, that we discharged a valuable public-interest role in uncovering many of the events and issues.

The Supreme Court had already found that DCC had engaged in serious fraud but this finding was essentially dismissed by a mere High Court inspector who effectively apologised to Flavin and DCC for any inconvenience caused.

Appleby also pointed out that the High Court inspector found that DCC had made a ‘costly error’ when illegally dealing in Fyffes shares in 2000.

Isn’t it incredible that one of the most senior law enforcement officers in the state can casually state that the ‘illegal’ trading of stocks was nothing more than a costly ‘error’?

The word ‘illegal’ has two different meanings in Ireland.

When the state is using the word in relation to cases like the DCC fraud it is just a series of letters beginning with ‘i’ and ending in ‘l’, it has no other meaning and therefore no further action is necessary.

For ordinary citizens the word always means police, arrest, courts and frequently – jail.