Category: IFSRA

Prior to the collapse of Ireland’s economy in 2008 there was a universal belief that Ireland possessed a functional financial regulatory system.

Subsequent to Ireland’s economic collapse there was a universal belief that light touch regulation was the core factor in bringing about the catastrophe.

Presently there is a universal belief that financial regulation has been radically reformed and is now fit for purpose.

All of the above beliefs are false.

Ireland has never enjoyed the benefits of real financial regulation. This is not an opinion, it’s a fact.

No financial institution or official has ever been charged with a crime despite the theft of countless millions over the decades.

Ireland did not suffer from light touch regulation; it was destroyed because there was no effective financial regulation whatsoever.

So called regulators knew about most of the major crimes committed over the years, like DIRT and Ansbacher, but did nothing.

When the media and whistleblowers (the real regulators) uncovered crimes that the Financial Regulator was not aware of no significant action was ever taken against the criminals.

As I write Irish citizens are continuing to suffer great losses because there is still no effective financial regulation in Ireland.

If what we are told by politicians, government officials and so called regulators is true, then the people involved in the Custom House Capital fraud would, at the very least, be under arrest.

That the people involved in this fraud are still walking around, enjoying the same rights and freedoms that law abiding citizens are entitled to, proves that there is still no effective financial regulation in Ireland.

Custom House Capital specialised in pensions for wealthy customers and managed investments of about €1.5 billion for about 1,400 clients.

The firm also invested in property in France and Germany on behalf of clients.

The company misused €56 million in clients’ money to cover up troubled property deals.

A report on the matter submitted to the High Court states:

There was a systematic and deliberate misuse of assets and cash belonging directly or indirectly to clients of CHC.

This misuse was deliberately disguised by CHC through the use of false accounting entries and the issue of false and misleading statements to clients.

The High Court ordered all reports on the matter to be sent to the Director of Corporate enforcement, the DPP, the Garda Commissioner and Revenue.

The so called Financial Regulator investigated CHC in 2009 after somebody noticed a strong odour coming from the company but, predictably, found nothing of great import.

Some managerial changes were recommended and the matter was dropped.

It was only when another company, Appian Asset Management, had taken over the non-property investment assets of CHC that serious concerns were raised.

It was only after this company acted that the so called Financial Regulator took any significant action.

Let’s repeat these facts as starkly as possible.

In 2009 the so called Financial Regulator carried out an in-depth investigation into CHC and found that, apart from some supervisory and organisational issues there was no significant problems with the company.

Here’s what the Regulator decided to do.

Following the identification of these supervisory concerns, related to compliance and organisational issues, the strategy was to encourage CHC to identify and engage with potential buyers for the firm, which would be the best outcome to protect client investments and funds.

CHC took that advice and shortly thereafter sold part of its business to another company, Appian Asset Management.

It seems that this was an attempt by CHC to off load that section of its business where the fraud occurred while holding onto its property assets.

Remember, this is, effectively, what the Financial Regulator advised.

The crucial point in all this is that a company that wasn’t engaged in any investigation easily discovered major fraud in a company that had just been investigated by our so called reformed and fit for purpose Financial Regulator.

It should also be noted that CHC was heavily engaged in fraudulent activity in 2009 when the Financial Regulator was, allegedly, investigating the company.

One of the victims of this CHC/Financial Regulator scandal precisely summed up my views on this matter (My emphasis).

I would like to see some criminal charges against those involved.

I would like to see an action taken against the Central Bank (Financial Regulator) because they were protecting the firm when they should have been protecting the consumers.

As I say; there is no effective financial regulation in Ireland.

Copy to:

Financial Regulator
Dept. of Finance
Director of Corporate Enforcement
DPP
Revenue
All political parties

From an Irish point of view there is absolutely nothing new about the recent scandals involving Anglo Irish and other banks. Theft and fraud within the Irish financial sector has long being an integral part of Irish culture.

Such activity is common because the State itself officially accepts such behavior as the norm and, over the years, has developed a whole raft of mechanisms and strategies to protect those in the financial sector who regularly engage in criminal activity.

We only have to look back at any one of the many scandals of the past thirty years or so to confirm the truth of the situation.

In this case I’ve chosen the Ansbacher scandal because, like the Anglo Irish Bank scandal, it involves secret names and a golden circle.

It will be obvious after reading the following quotes, opinions and comments that nothing has or is about to change in corrupt Ireland.

((My comments are in brackets, emphasis mine).

On the 27th September 1999 the then Tanaiste, Mary Harney, gave the following excuse for not publishing the Ansbacher names.

“If the Government were to break the law and publish the names, everybody on the list would walk free and prosecutions would not be brought.”

(During the Ansbacher scandal Harney constantly made the case for secrecy because, she claimed that she was absolutely determined that prosecutions would follow, that justice would be done).

When the Ansbacher report was finally published in 2002, five years after the scandal was first uncovered, Mary Harney’s party colleague and Minister for Justice Michael McDowell cautioned against public expectations that a rash of arrests and prosecutions would follow.

(This is thinly coded message for the crooks – Don’t worry, our strategy of putting things on the very long finger worked, you’re all off the hook).

(Nobody was ever prosecuted for the Ansbacher criminality. Those involved did secret deals with Revenue and a few were banned from acting as company directors. The exact same strategy is being adopted by the present Government to protect the bankers).

Mary Harney (Still in office) must have had a moment of Déjà vu as she listened to Brian Cowen.

“Be assured that the suggestions being made quite frankly by political opponents that I’m in some way not very much in favour of bringing this into the public domain as soon as possible consistent with the proper investigation of this which wouldn’t put anything at risk or compromise any future prosecutions that would be deemed to be appropriate.”

Here are some more quotes from the Ansbacher scandal to confirm that strategies employed by government to protect the corrupt are still the same.

“The Fine Gael motion calls on the Government to ensure that names of all persons who held Ansbacher accounts are made public via a Dail committee.”

(The Opposition made the same suggestion regarding the Anglo Irish Bank names and the Government has rejected it, just like they did in 1999).

The Ansbacher report was finally published in 2002.

“The Director of Public Prosecutions James Hamilton is also considering a copy of the report. Responding to queries yesterday he pointed out that if any criminal offence disclosed by the report requires further investigation for the purpose of prosecution, this will be a matter for gardai, the Revenue Commissioners, the Director of Corporate Enforcement or the Central Bank.”

(As I mentioned, no prosecutions were ever brought).

“The Ansbacher report is not just a damning indictment of those wealthy and powerful individuals who evaded their due taxes, broke company law and engaged in criminal conspiracies from the 1970s to the 1990s, it reflects the failure of Irish regulatory authorities and professional bodies to uphold the standards required of them in the interest of the common good. There is a great deal to be ashamed of in the report and many lessons to be learned. New and rigorous standards must be applied by the authorities.”

(No lessons have been learned because the same corrupt administration is still in place)

“In a series of interviews at the weekend, the Minister for Justice, Mr. McDowell, hoped for a change in Irish attitudes so that people who engaged in multi-million pound tax fraud were not regarded as heroes in their local yacht clubs while those who fiddled their social welfare payments were sent to jail”

(Just recently, we heard Ulick McEvaddy refer to the Anglo Irish ‘names’ as heroes. He’s not the only one who thinks this way).

“Nobody believes it will be easy to successfully prosecute some of the extremely wealthy individuals involved. But, if a determined attempt is not made, the consequences will do lasting damage to our democracy. The belief that there is one law for the rich and another for the poor will grow and flourish.”

(Only the corrupt or the very ignorant would claim that there isn’t, in fact, one law for the rich and another for the poor).

“The Government will face strong opposition demands today for assurances that prosecutions will follow arising from the publication of the Ansbacher report.”

“The public must be shown that such behaviour will not be tolerated. The most obvious and public penalty is a jail sentence for the guilty.”

(Nobody went to jail; corruption in the business and political sectors is still rampant).

The following is a statement from the Paul Appleby, Director of Corporate Enforcement, on 6th July 2002, in response to the publication of the Ansbacher report.

It is worth reproducing in full to give an indication of what action we can expect from this toothless tiger regarding the Anglo Irish Bank scandal

6TH JULY 2002

I am determined that action will follow.

Speaking at a press briefing in Dublin on Saturday morning, Mr. Paul Appleby, Director of Corporate Enforcement, said:

“The company, now known as Ansbacher (Cayman) Ltd., secretly operated in this jurisdiction for over twenty years and conducted business which, the Inspectors have found, amounts to evidence tending to show that it contravened prevailing banking, tax, company and other legislation. When its activities came to light in 1997, the nation was shocked that such activity had occurred and had remained effectively hidden from official authorities for so long.

In a sense, these revelations infected our collective psyche in subsequent years, creating suspicions that it was possible to evade legal or other obligations without effective sanction and thereby undermining respect for the rule of law and damaging public confidence in the State’s institutions.

The conclusion of the Ansbacher inquiry and the publication of this Report represent, in my view, the first phase in purging these doubts and regaining lost ground. In defining publicly for the first time the company’s Irish business, the High Court Inspectors (past and present) have done a remarkable public service.

Indeed, the Companies Act 1990, and particularly the company investigation provisions of that Act, have again proved their worth and highlighted the importance of these legal provisions in investigating circumstances suggesting unlawful corporate conduct.

As this important phase of fact-finding investigation concludes, the relevant State Authorities, including my Office, will now examine what remedies are available to address the findings in the Inspectors’ Report.

My staff and I have commenced identifying the matters which fall within our statutory remit. Every line of potentially valuable inquiry will be examined thoroughly, and I am determined that appropriate action will follow. I am mindful, however, of the Inspectors’ comment (at page 18 of their Report) that they foresee some difficulty in bringing prosecutions arising from the matters investigated by them.

(Damn, there’s that Michael McDowell message to the corrupt again)

As early as next Monday, I will be seeking the approval of the High Court to gain access to certain of the Inspectors’ papers, in order to allow us to follow up on a number of issues in the Report. We will also be supporting in due course an application for the recovery of the costs of this Inquiry, in order that the taxpayer does not bear further financial loss as a result of the events described in the Report.

In the coming weeks, I will be considering what further action is warranted to remedy or sanction the conduct which is indicated in the Report and is relevant to my responsibilities under the Companies Acts.

I have no doubt that other relevant State Authorities, such as the Central Bank, the Revenue Commissioners and the Director of Public Prosecutions, will closely evaluate their own legal options in the light of the information contained in this Report.”

(They did indeed evaluate their legal options and, as is the norm in Ireland, did nothing).

Here are some comments on the Regulators in the report. (Note: The Central Bank was the so called financial regulator at the time).

“Failures by the Central Bank meant the Ansbacher scheme went undetected for years”

“The bank’s failure to test, appraise and gather information “available to it” resulted in the true nature of the activities going undetected for longer than ought to have been the case.”

“The bank had reservations at all times about the loan-book, but took at face value assurances by the scheme’s mastermind, the late Mr. Des Traynor, that the amount of loans extended to Irish residents was being run down.”

(Just as the present so called financial regulator took the word of Anglo Irish Bank lawyers that its controversial €300 million share deal last summer was above board. This is no accident, it has nothing to do with incompetence, it is, effectively, an official policy).

The Tánaiste, Ms Harney, on the failures of the Central Bank.

“It seems extraordinary that we lived in a time where the culture, even amongst State organisations, was one of ‘let’s pretend we don’t know’ because clearly in some cases where organisations knew or should have known they seemed to take the view that they didn’t want to know.”

(The exact same attitude and practices are still dominant in the Irish regulatory system today).

Writing in the Irish Times 8th July 2002 Mark Brennock made the following comments and observations.

“The Government must now reassure the scandal-weary public that this can never happen again.”

(Corruption within the financial sector never stopped, never even waned. That situation will continue for so long as Ireland remains a corrupt entity in itself),

“Governments are responsible for the level of regulation, and there was clearly a massive regulatory failure. This systematic evasion went on for over two decades, unhindered by the Central Bank, the Revenue Commissioners, company law regulators or prosecuting authorities.”

(Hardly an hour passes without some politician, journalist or banker telling the Irish people ‘there was clearly a massive regulatory failure’ regarding Anglo Irish Bank. We will continue to hear this into the future until somebody actually establishes a proper regulatory systems that puts people in jail rather than, effectively, facilitating their crimes)

“The Tánaiste yesterday pointed to a new system for regulating the accountancy profession, new legislation to encourage “whistle-blowers” and enhanced powers which have been given to the Revenue Commissioners.”

(None of this was done and politicians are still waffling on about the ‘urgent’ need for such reform as a result of the Anglo Irish scandal).

“The powers of a new financial services authority are detailed in a Bill currently before the Dáil.”

(This ‘new’ financial services authority was finally established in 2003. It was hailed as a powerful and hard hitting agency that would forever rid Ireland of the corrupt vermin that infects the financial sector – it was a complete failure.

Today this failed ‘authority’ is investigating itself for its part in the Anglo Irish Bank scandal. It will clear itself of all charges and continue to implement policy and secrecy laws that, effectively, protect fraudsters).

Then Tanaiste, Mary Harney on the Ansbacher report.

“The report is a watershed in Irish life” for the clarity of the insight it gives us of how a section of the political and business class in this State used to operate. The political task is to demonstrate to a scandal-weary public that it can’t happen again.”

(Harney is still in power and a scandal-weary public is still waiting).

And finally.

“The report showed that there was now the capacity in Ireland to “lift the veil of secrecy” over such activity. The Government had already begun the process of ensuring there was a coherent and comprehensive body of law to ensure “that our society is a fair and just place in which to live and do business“.

There is virtually no prospect that our corrupt system will suddenly decide to reform itself and therefore the only hope we have of ridding ourselves of the rampant corruption that infects our political, business and bureaucratic sectors lies with EU intervention.

I fervently hope, for all our sakes; that we see such an intervention before very long.

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Financial Regulator
ODCE
Government