Category: Government

Mulcahy's silly nuclear button

I know only two things about Nick Mulcahy. He is the editor of the Irish business magazine Business Plus and he knows very little about corporate fraud.

I gleaned these facts after reading an article in the Irish Independent by Mulcahy in which he analyses the latest developments in the DCC/Fyffes case.

According to Mulcahy, ODCE ‘pressed the nuclear button’ when they asked the High Court to appoint an inspector to investigate DCC/Fyffes over allegations of insider trading.

Pressing the nuclear button or taking the nuclear option means taking an action of last resort. In other words, only taking the most serious action after all other avenues have been exhausted.

So what action did so called Irish regulatory/enforcement authorities take in relation to the €83 million fraud perpetuated by Jim Flavin of DCC before being forced to press the nuclear button?

Initially, not a damn thing. When it became obvious that something very strange had occurred on the Irish Stock Exchange (ISE) regarding DCC/Fyffes shares not a single Irish authority acted.

It was only when the London Stock Exchange, a regulatory agency operating from a functional jurisdiction, insisted that an investigation be carried out that the ISE finally took action.

The manner in which the ISE investigation was conducted has itself raised very serious questions regarding ethical and possibly illegal interactions between the ISE, DCC and the DPP. In the best traditions of ignoring suspected wrongdoing in Ireland, this aspect of the scandal has been practically ignored to date.

After the (suspect) ISE investigation was completed, again, nothing happened. The ISE, Irish police, Financial Regulator and the Government simply buried their collective heads in the sand.

It was only when Fyffes, fearing possible financial consequences if it failed to protect the interests of its shareholders, was forced to take a civil action against DCC that the case became active again.

It is entirely from this civil case and the publicity that it generated that the ODCE, possibly the weakest financial regulatory agency in the State, was embarrassed into taking action.

If the ODCE action is successful, and that is highly unlikely, and if it decides to punish DCC/Jim Flavin for any wrongdoing then that punishment will represent the absolute minimum action that the State can take in the case.

ODCE boss, Paul Appleby, knew that he hadn’t a hope in hell of a successful action if he was depending on his miniscule legislative power and resources. That’s why he scuttled over to the High Court and the Supreme Court when they were adjudicating on DCC/Fyffes, to make a pathetic plea to these courts to use their considerable powers to act against DCC/Flavin. His pleas were rejected out of hand.

As a last resort (and there’s certainly nothing nuclear about the effort) Appleby made a formal application to the High Court for the appointment of an inspector. The only advantage Appleby and ODCE will enjoy from this appointment is that their meagre resources will not be totally obliterated as they would have been if they were forced to take the action themselves.

So, what happens now? Well, the farce continues. The High Court inspector will take years to complete his investigation (The NIB investigation took six years).

ODCE then have the option of seeking to have those involved in the scandal disqualified from involvement in the management of a company (This is the absolute minimum punishment available to the State). This action will also take years (ODCE has only just completed action against those in the NIB scandal after years of legal wrangling).

By that time Jim Flavin and many others involved will have retired (and may even have died) and the whole matter will be seen as historical. It is an absolute certainty that those involved in the scandal will never be subject to a police investigation, will never be brought before a court to give an account of their actions, will never see the inside of a prison.

The Supreme Court found that Jim Flavin of DCC had engaged in insider trading involving sums of over €83 million. If the same finding was made in a functional democracy strong, immediate and effective action would have been taken by the police and all associated state enforcement/regulatory agencies.

If we are to judge by a recent and very similar insider trading case in the US, Flavin would now be serving a lengthy jail sentence, he would have been forced to repay his ill gotten gains; he would have had his substantial wealth seriously reduced by the imposition of hefty fines and forfeits.

Nick Mulcahy’s amateurish and naïve analysis of this case is an important factor in how white collar crime is dealt with in this country. Government and so called regulatory agencies will continue to ignore allegations of serious fraud until they are brought under strong pressure by well informed and persistent journalists.

Mulcahy’s silly ‘nuclear button’ conclusion is an indication of just how far away we are from that ideal situation.

Copy to:
Business Plus
ODCE
Financial Regulator
DCC

Tammany Hall passports – The next phase of the farce

I spoke again with my contact in the Passports Office regarding the Tammany Hall passport scheme operated by politicians for the benefit of favoured constituents.

The review has been going on now since last February and should have been published earlier this month. Alas, something always seems to crop up just when publication is near.

On this occasion the Dept. Secretary General is out of the country and the other seven committee members are powerless to act until he returns tomorrow. If the committee, in their wisdom, decide that the review is ready they will sign off on the document and forward it to the Minister for Foreign Affairs for his consideration.

We will then be into the next phase of the farce – Trying to get an answer from the Minister.

Still waiting for Tammany Hall passport review

Last February the Department of Foreign Affairs began a review of the special passport scheme operated by TDs.

All TDs, Senators and political parties were to be asked their opinion on the usefulness of the scheme. The minister would then consider these views and make a decision. Five months later and we’re still waiting for a decision.

Throughout the review I have been in regular contact with staff from DFA but that all ended a few days ago, the curtain has come down. My regular contact hasn’t been available and the Press Office says they have no information on the review and cannot say when or if it will be published.

Perhaps the politicians have forgotten about the review as they excitedly pack up for their very long summer holidays, perhaps it will be published in late September when they come back, perhaps not.

In any case, We’ll keep on enquiring.

Tammany Hall Passports – Update

The review into the Tammany Hall passport scheme is continuing – and continuing – and continuing.

The scheme is an expensive scam that allows politicians to do favours for favoured constituents.

In my regular contacts with the Passport Office I am constantly told that the review is ongoing but should be complete before the summer recess on 3rd July.

I rang again yesterday and was told that as the Dail was sitting an extra week the review would not be complete until sometime around that date.

Obviously the strategy here is to publish the review just before the politicians head off on their long summer holidays in the hope that all will be forgotten by the time they return.

It’s a sly but standard strategy designed to avoid accountability.

Aruba? Where the feck is Aruba?

According to Colm O’Gorman of Amnesty International, the US department of Homeland Security is coming to Ireland.

Speaking on The Last Word (Thursday), O’Gorman claims that the Government is in talks with the Americans to allow the establishment of units of Dept of Home Security and Secret Service to operate in Shannon airport.

The units will have the power to board private aircraft, vet crew and passengers and check for radioactive material.

O’Gorman makes the reasonable point that it is extraordinary that the Irish Government is considering allowing the US government to check planes at Shannon while at the same time seeing no need to check CIA operated private aircraft known to be involved in the commission of significant crimes in violation of international human rights

Actually, I don’t think it’s extraordinary at all. Imagine you’re George Bush dealing with a gang of cowardly, double dealing, unscrupulous Irish political chancer’s who will do anything if the price is right. You already know they’re turning a blind eye to American activities so what’s to stop them adopting the same attitude to say, the Iranian Government, if the right deal is offered.

No wonder George is putting his own team in to keep an eye on the slippery Irish.

Fine Gael spokesman for foreign affairs, Pat Breen TD, confirms the point. On the same show he argued that Shannon needs the business to compensate for the loss of Open skies and the Heathrow service. He said dozens of other European countries were looking for the ‘facility’ but only Ireland was getting it because of our special relationship with the US.

Well, not just Ireland. Apparently Aruba is also in negotiation with the Americans for the same ‘facility’. Aruba? Where the feck is Aruba? Check it out here; it’s a small 21 mile long island off the coast of Venezuela.

Ah yes, I imagine all those other countries that opt for self respect in matters of security are just green with envy when they see how easy it is to sell for a few dollars.

Yes campaign jitters

There’s a certain degree of desperation creeping into the Yes referendum camp.

Fine Gael MEP Gay Mitchell said that if we vote No we will have to pay for our own defence here at home. The suggestion being that by voting Yes we can freeload on EU taxpayers for our defence.

We’re also being reminded by various Yes campaigners of the great benefits brought to us by EU membership; equal pay, workers rights; protection of the environment and so on.

These politicians seem to be genuinely unaware that this argument is an admission of their own incompetence.

Homer's logic and the HSE

Minister for Health Mary Harney has refused to say whether or not she was aware of the alleged fraudulent activity by Quest Diagnostics, the company which was awarded the multi-million euro smear testing contract despite serious concerns over their track record in the US.

In defence of the contract Ms. Harney said Quest Diagnosis was able to provide a quality assured service at a third of the cost of any Irish company that tendered.

This reminded me of a recent episode of the Simpson’s where Marge berates Homer for hiring a dodgy but cheap plumber. Homer explained that he made his decision based on the company’s attractive logo. Sounds like HSE logic to me.

Tribunals: Mechanisms of denial

The Prime Minister is under pressure to resign over allegations that he took bribes from a wealthy businessman. He has strongly denied the allegations claiming that the payments were given to him by a friend to cover election expenses.

Everything was legal, I never took a penny for myself, I’ve done nothing wrong, he said.

Commentators and opposition politicians have claimed that the controversy is hampering the proper running of the state and is having a detrimental affect on the peace process.

Broadly speaking, this could be a brief description of the recent scandal involving former Taoiseach Bertie Ahern. When we hear some more details, however, we know for certain that the story bears no relation whatsoever to how things are done in Ireland.

The police are investigating the Prime Minister; the Attorney General is involved and will shortly make a decision on whether he should indict the PM. If the Prime Minister is indicted there will be a court case, a judge/jury will decide the PMs Fate; if he’s found guilty he will be disgraced and will suffer appropriate punishment.

Unlike Ireland, Israel is a functional democracy where state agencies like the police, Attorney General and the courts take immediate action against allegations of political corruption. Functional democracies like Israel do not hand over such serious matters to ineffective and never ending tribunals.

Just weeks ago Bertie Ahern was due to make himself accountable to the Irish people regarding serious contradictions in his evidence to the Mahon Tribunal. Instead of making himself accountable he announced his resignation and was immediately hailed as the greatest Irishman since Daniel O’Connell.

Nobody has asked Ahern any questions since then, he will eventually appear before the tribunal again but it will mean nothing. Even if the final tribunal report finds that he took bribes, that he committed perjury; that he cheated on his taxes; it will still mean nothing. The police will never question him; he will never be charged with any crime, he will never be made accountable.

The tribunals are, in effect, a system for side tracking allegations of very serious business and political corruption away from investigation by the police. They also serve as a mechanism of denial for the majority of Irish people whereby they can fool themselves that Ireland is a normal country.

Lisbon Treaty and evil plots

Fine Gael TD, Lucinda Creighton made a strong but somewhat bizarre defence of the upcoming Lisbon Treaty referendum (Marian Finucane Show, Sunday 27th April).

“I wouldn’t advise anybody to form a judgement on the basis of reading the Treaty…It’s a legal text and very, very complex. There are a number of comprehensible summaries available.”

Are you saying that while the peasants can’t understand the document the important people can and that all will be well – suggested Marian.

“It’s a legal text, most right minded people are not qualified as lawyers (She’s right there) to read and interpret it but it must be that way so it can be interpreted by the courts.

That’s the way it has to be and that’s the way it has been and that’s the way it was when we joined the EEC.” (And so it shall always be for ever and ever, Amen).”

Ms. Creighton’s argument seems to be that because the Treaty is a legal document it is by definition a very complex document and voters will just have to believe what the politicians and bureaucrats tell them.

But the Treaty is actually a rehash of the EU Constitution that the French and Dutch threw out. According to businessman Ulick McEvaddy, who is voting No in the referendum, the Treaty represents 95% of the rejected EU Constitution.

Ms. Creighton didn’t say whether the failed constitution was a legal document or not. Neither did she enlighten listeners as to what exactly is contained in the 5% difference between the two documents that makes such a critical difference. I guess we just have to trust her.

Apparently Ms. Creighton has issued a statement on the referendum campaign in which she claims that the United States Homeland Security Department is secretly campaigning against the Treaty. According to Ms. Creighton the United States is opposed to political integration between European states.

She also claims that McEvaddy and another businessman who have business links with the US military are part of the plot.

When the discussion moved on to the question of why all other EU citizens are being denied a vote on the Treaty, Ms. Creighton began to rant on about Hitler and the abuse of plebiscites in the 1930s.

It was then I decided it was time for a cup of tea.

A rotten and intrinsically corrupt state

According to RTEs economic editor, (8th item) George Lee, the Fyffes/DCC saga finally came to an end this afternoon – He’s wrong, it did not. We are also constantly told by George Lee and other so called experts that this is a complex case – It is not.

In 2000, Jim Flavin of DCC illegally traded in Fyffes shares making a profit of €85 million. Fyffes took a civil case against DCC to get their money back.

It’s likely they took a civil case because if they took a criminal case they would have had to answer questions about their own dodgy behaviour. For example, Fyffes issued options to senior executives and allowed a senior executive to sell shares when they should not have.

Fyffes lost their case in the High Court but went to the Supreme Court where they won. One of the judges, Mr. Justice Fennelly was crystal clear:

To trade on the use of inside information is recognised for what it is. It is a fraud on the market.

There’s nothing complex about that. It’s a simple case of greed and fraud.

But Flavin’s fraud pales into insignificance when compared to the real scandal surrounding this case – The absolute failure of any State agency to take any real action against this fraudster.

It is also an absolute disgrace that RTE has completely ignored this aspect of the scandal. Hence George Lee’s assertion that this saga has come to an end when in fact the real scandal has never even been addressed.

In functional democracies, insider trading is a very serious crime. When it is uncovered there is immediate and strong action by all relevant law enforcement authorities.

I have already cited the recent Nacchio case in America. Joseph P. Nacchio, former chief executive of Qwest, was sentenced to six years in prison, fined $19 million and ordered to forfeit $52 million he earned from illegal stock shares in 2001 – That’s real law enforcement in a real democracy.

Let’s be absolutely clear about what has happened here in this corrupt Republic.

Jim Flavin has been exposed as a fraudster in a case involving millions of Euros and nobody, absolutely nobody is going to act against him. The law will not be enforced; the law is being deliberately and consciously put to one side so that Flavin can remain a free agent.

In effect, the State has decided that this fraudster is to be treated as if he deserves the same status of innocence and respect as all law abiding citizens.

Let’s also name the so called State enforcement/regulatory agencies that have, to date, failed in their duty to enforce the law, to do their duty, to act as they should in the best interest of the State and its citizens.

The Director of Public Prosecutions
The Financial Regulator
The Stock Exchange
The Revenue Commissioners
Institute of Chartered Accountants (The fraudster is a member of this organisaton)
Irish Association of Investment Managers (IAIM) (Which, allegedly, oversees corporate governance in listed companies)

The Director of Corporate Enforcement, Paul Appleby, made a pathetic attempt to get some of those involved in the fraud disqualified from acting as directors; his plea was rejected out of hand.

He now has to decide whether to pursue a petition through the High Court. If he decides to go ahead the case will take years and consume a large portion of his meagre resources and finances.

Considering his options he must be aware that he hasn’t a hope in hell of succeeding but even if he does it won’t matter a damn because Flavin the fraudster retires in two years time anyway.

This case is very important not just because it is such an outrageous scandal, not just because the State blatantly refuses to take any effective action, not just because there is no doubt and virtually no argument concerning the facts of the case but because the scandal exposes and confirms the indisputable fact that the Republic of Ireland is a rotten and intrinsically corrupt state.

Copy to:

Director of Public Prosecutions.
Financial Regulator.
Irish Stock Exchange.
Irish Revenue Commissioners
Institute of Chartered Accountants
Irish Association of Investment Managers
Director of Corporate Enforcement
DCC
Fyffes
RTE (News)