Category: Regulatory Agencies

Politicians: Nothing more than messenger boys

It is widely assumed that the banks were pleading for help when they rang the Minister for Finance, Brian Lenihan last Sunday night.

Wrong – The banks were summoning the Minister to instruct him on what action they required of him.

And it’s not just the Minister who jumps when the banks come calling; the so called Financial Regulator and Central Bank also dance to whatever tune the banks are playing.

Up until last weekend the tune was simple – No matter what the evidence is, no matter how stupid you look, you are to maintain the charade that Irish banks, unique in the world, are not in any kind of trouble, you are to deny all suggestions that we have recklessly loaned out billions to property speculators and developers.

As recently as 6th Sep last Lenihan was doing what he was told.

“I can assure your listeners that the Regulator has maintained a very detailed supervision of Irish banks and that the Irish banks are not in anything like the difficulties that their counterparts in the US are.”

Here’s what I had to say about the Minister’s comments (Link as above).

“This Minister knows nothing about the real situation because his information comes from the Central Bank and the so called Financial Regulator who take their orders from the banks. Taxpayers should hold on tightly to their wallets, the banks will soon be looking to do some more pick pocketing.”

Now, €400 billion later the Minister, regulatory authorities and the taxpayer are dancing to the banker’s new tune.

Even the experts don’t seem to know what’s really happening. Economist David McWilliams, who was first to openly state that Irish banks were in trouble, is naïve in the extreme when it comes to his views on how the banks should pay for their sins. He’s worth quoting at length (RTE, 1st report, 2nd item).

“I would hope that the Government moves very quickly to replace the senior management of many of the banks that have behaved extremely recklessly. And that means by making board appointments of outside people, not civil servants, but people who have the national interest at heart. The Government guarantee cannot come for free, it can’t be a blank cheque, it has to come with strings attached…Brian Lenihan and his advisors are in the driving seat and if they think about their position they can change the way Irish banking works.”

“We’ve got to get rid of Gombeenism; we’ve got to get rid of the proximity between developers, banks and the Government. We’ve got to get rid of these idiosyncratic ways in which our society was run for the last four or five years.”

Like most Irish citizens, McWilliams seems to be completely and innocently unaware of the kind of country he lives in; he genuinely seems to believe that Ireland is a normal democratic country.

His reference to Gombeenism and our idiosyncratic ways might just be the beginning of a realisation that Ireland is unlike any other Western state, that there is something seriously dysfunctional about the way our country is governed.

We at Public Inquiry have been shouting the message for years – Ireland is a corrupt state, the politicians do not work in the interests of the people, the civil servants for the most part serve the politicians and the Government, not the people. Banks and other big business do as they please with impunity; they are never, ever brought to account. How long will it take before the message gets through?

Next week, when the bankers finally reveal the details of their plan, when they tell us what decisions they have made regarding the future of our country, we will hear a lot waffle, a lot of weasel words and a lot of breast beating from our politicians but believe me there will be no challenge to the status quo.

There will be no sacking of senior bank management, there will be no appointment of outsiders to bank boards or if there is they will be given the job of making the coffee. There will be no financial cost to the banks; there will be no strings attached to the deal because it is the banks that are calling the shots.

Our politicians are nothing more than messenger boys for the real power in this country.

Here we go again…

Tánaiste and Enterprise, Trade & Employment Minister Mary Coughlan has asked the Comptroller and Auditor General to launch a special investigation into FÁS expenditure since 2000.

Let us be in no doubt. This investigation will be a complete waste of time, resources and money. The C & AG is a completely powerless organisation. It does not have any power to bring charges as a result of any wrongdoing discovered; it is empowered merely to offer an opinion – that’s it.

In its most recent investigation, into Bord gCon, the C&AG uncovered very serious corruption, fraud and incompetence, yet, bizarrely, concluded that

“In material respects the financial affairs of the company were properly run.”

No action whatsoever was taken by any government authority as a result of these very serious findings. It should be noted at this point that the C&AG was the auditor of Bord na gCon while many of these dodgy activities were going on.

The C&AG is also the official auditor of FÁS. So what are the chances that the organisation responsible for signing off on the finances of FÁS every year is going to make any serious criticisms of that organisation? Isn’t it more likely to conclude that ‘In material respects the financial affairs of FÁS were properly run’?

When completed, the C&AGs report on FÁS will be passed on to another completely powerless body – The Public Accounts Committee.

This group of useless politicians will discuss the matter once in public and once in private and that folks will be the end of the matter. It doesn’t matter how much corruption, fraud or incompetence is uncovered – nothing will be done.

In my opinion it is no accident that the C&AG is powerless, it is no accident that the PAC is powerless and it is no accident that Minister Coughlin has decided to hand over this very serious matter to these powerless agencies.

If Ireland was a properly functioning and accountable democracy the police would be ripping through the files at FAS, civil servants would be answering questions under police caution and politicians would be wondering how their heads fell off.

Depressingly, Ireland is not a properly functioning democracy, there will be no police action, no political heads will roll and corruption and incompetence will continue at all levels of Irish society.

Copy to:
C&AG
FAS
PAC

Special arrangements for special people

The fraudster Jim Flavin of DCC is walking around a free man because Fyffes, in their own interests, decided to take a civil rather than a criminal case against him. Despite the Supreme Court’s conclusion that Flavin was guilty of insider trading to the tune of €83 million the Irish State has made no move to press criminal charges.

The rogue solicitor Michael Lynn is also enjoying the benefits of being dealt with under civil rather than criminal law. Lynn, whose alleged fraud also involves a figure of around €80 million, is due to give evidence from London via video link next month in a case unrelated to his own dodgy activities.

For reasons best known to himself the DPP has decided not to initiate criminal charges against Lynn. This situation makes life very easy for the rogue solicitor; he can come and go as he please so long as he doesn’t return to Ireland.

The Garda Fraud Bureau investigation into Lynn is slow and cumbersome and according to Garda sources will not be completed for a number of months.

When the investigation is complete the DPP must then make a decision on whether criminal charges should be brought. According to a report in today’s Irish Independent this will also take several months. We are not told why a decision like this should take so long.

Here’s what I think.

Civil rather than criminal proceedings allow Lynn the freedom to continue operating his businesses. This means he can work away at trying to resolve his ‘difficulties’.

Meanwhile, the low key and long drawn out process here in Ireland, whether intentional or co-incidental, leaves the way open for a deal to be eventually worked out to the satisfaction of all parties.

We shouldn’t therefore be surprised if at some point there’s an announcement that ‘arrangements’ have been made between the interested parties and the DPP doesn’t have to resort to all that embarrassing and nasty criminal proceedings stuff after all.

The powers that be can then continue to operate under the illusion that Ireland is on a par with other Western jurisdictions where the rule of law is seen as vital to a healthy democracy.

One law for rich and powerful

Letter in this morning’s Irish Independent.

One law for rich and powerful

NOT surprisingly, the fugitive solicitor Michael Lynn has refused to return to Ireland to give evidence in a High Court case (Irish Independent, September 20).

How touching, therefore, to see State and legal authorities facilitating this fugitive in tying up loose ends from his previous work by providing a video link from his bolt hole somewhere in London.

It is, however, puzzling to us ordinary folk how the State can make such arrangements with this man and yet seem totally incapable of taking the necessary action that would make him accountable for the very serious allegations he is facing.

Perhaps those same authorities could arrange an annual two-week amnesty for Mr Lynn so that he could return home and nostalgically breathe in the air of a country where the level of accountability apparently depends on one’s profession and standing in society.

Anthony Sheridan

The untouchables

According to the Sunday Tribune, Celia Larkin, Bertie Ahern’s ex-girlfriend, was paid almost €30,000 in fees and expenses for sitting on the board of the National Consumer Agency – a position she described as purely voluntary.

The NCA is a useless organisation that claims to act in the best interests of consumers but, for the most part, fails miserably in its mission.

This useless quango, which has a pitiful budget of €10 million, has a bloated board of 12 and has cost the taxpayer more than €330,000 in expenses and fees. Its chief executive, Ann Fitzgerald, is paid a disgracefully high wage of €182,333.

There is nothing new about this scandal. We know, and have known for years, that there are thousands of Irish citizens doing exactly what these people are doing – sucking the State dry of vital funds that could otherwise be used to benefit those who deserve help.

Does anybody really believe that Ahern, who appointed Larkin, is worried about these revelations, that he’s chewing his nails with worry about possible consequences? Is there anybody naïve enough to think that Larkin gives two damns what people think? Is there anybody fool enough to believe that there’s some state authority or some politician out there who will challenge these people, who will act in the interests of the people?

No, low grade people like Larkin and Ahern do not care what people think, they are confident that they operate in a jurisdiction where accountability is almost non existent, where they are practically untouchable.

None of this will change until the Irish people learn how to express their anger en masse – I’m not holding my breadth.

Copy to:
NCA
Fianna Fail

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

Hot air and cynical strategies

On 13th May last I discussed the DCC/Fyffes case with Fine Gael TD David Stanton.

I wanted the matter raised in the Dail; specifically I wanted to know why the State was failing to take effective action against a man who the Supreme Court found had engaged in insider trading.

In addition, knowing that I would be wasting my time, I requested that deputy Stanton ring the Director of Public Prosecutions to enquire if his office had received a report from the Garda Bureau of Fraud Investigation who, it was reported, was investigating the case.

The DPP told deputy Stanton that they could not give out such information over the phone and that I should put my request in writing. I phoned the DPPs office myself and was given to understand, just as deputy Stanton was, that my question would receive a favourable answer if I put it in writing.

With a great deal of skepticism I wrote to the DPP.

To Whom It May Concern,

It was reported in the Irish Times on the 22nd December 2005 that the Garda Bureau of Fraud Investigation had started an inquiry into the share trading activities of DCC.

I would be grateful if you could confirm or otherwise whether the Garda Fraud Squad submitted a report or file on this case to your office.

I would also be grateful if you could say whether your office has ever considered the DCC/Fyffes insider trading case in any other form or under any other heading.

I am aware that your office cannot comment on the details of any individual case and want to emphasise that I am not looking for details but merely to ask if the DCC/Fyffes case has ever come under consideration by your office.

Yours sincerely
Anthony Sheridan

Over a month later and after a number of phone calls to remind the DPP that I was still around I received the following letter.

Dear Mr. Sheridan,

I refer to your letter of the 29th May 2008 in relation to the case of DCC/Fyffes.

“By way of general comment I would say that it is not the practice of this Office to confirm whether or not a file has been sent here by the Garda Siochana or other investigative agency, other than to people directly involved in the matter.”

Yours Sincerely
Barry Donoghue
Deputy Director

What happened here was the age old and cynical ‘make them put it in writing’ strategy. The DPPs office could have given this information to me or deputy Stanton over the phone in about 15 seconds. Furthermore, I simply do not accept that the information I was seeking is in any way sensitive.

So where does this leave the DCC/Fyffes case?

Well the DPPs office is a dead end as is the Garda Bureau of Fraud Investigation because both agencies are protected by state secrecy laws.

In my opinion neither of these agencies have any intention of acting against DCC. Neither has any other state agency, apart from the ODCE, shown the slightest interest in acting in response to what is the most serious financial fraud in the history of the state.

Paul Appleby of OCDE, to his credit, is attempting to have the High Court appoint an inspector to investigator the case. He is, of course, wasting his time and taxpayers money.

He has already been to the High Court twice where a lot of hot (legal) air has been expended but as yet no inspector has been appointed.

I spoke with a staff member from the ODCE and asked him when we could expect a decision from the judge. Sometime in the immediate to medium future he replied vaguely.

Another lid lifted – another overwhelming stench

Yet another Government agency has had the lid lifted on its activities and the stench is overwhelming.

FAS, the national training and employment authority is under investigation by the Gardai. As usual in Ireland the alleged corruption wasn’t uncovered by any state regularity agency but came about when Mary Harney received an anonymous letter way back in 2004.

Fine Gael TD, Leo Varadkar, one of the very few effective politicians in Ireland, has been asking questions about what’s been going on in FAS (Morning Ireland, 6th report).

When he questioned Tanaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, he was dismissed with the comment that everything had been sorted out and that FAS had changed its procedures.

The Gardai are conducting a criminal investigation into allegations that a company hired by FAS defrauded the agency of significant amounts of money but the amazing aspect of the scandal is the activities that are not being investigated by the police. According to Varadkar these include.

Huge amounts of money spent without obtaining the necessary authority from the board of FAS. (Echoes of the Bord na gCon scandal here).

An advertisement contract given to a local newspaper, possibly in a pub, where it is alleged match tickets were exchanged for the contract.

€1.7 million spent on duplicating a website that already existed.

An exhibition contract of €250,000 given to somebody at double the going rate.

A general disregard for normal procurement procedures within the organisation.

Let me repeat – These are the activities not being investigated by the police.

Varadkar wants to know what’s being done about this situation, who has been sanctioned and what’s going to change.

May Zeus bless his innocent head if he thinks he’s going to actually get answers never mind action.

White collar crime in Ireland? – Where?

Crackdown, fraud, hundreds of arrests, greed, fraud charges. These are some of the words used by RTE in a report (6th report) on the action taken by US law enforcement agencies against those involved in the sub-prime scandal.

In the same report we see film of two executives from Bear Stearns bank who were charged with fraud being led away in handcuffs.

It really is fascinating to compare this report with how RTE (1st report) covered the resignation of Jim Flavin when he resigned from DCC recently.

Keep in mind that the Supreme Court found that Flavin fraudulently engaged in insider trading involving sums of over €83 million.

Not once in the report are the words fraud; greed, charges or arrest mentioned. RTE economist George Lee is also interviewed on the scandal and again no mention whatsoever of fraud, greed or crime.

RTE, in common with the rest of official Ireland, simply refuse to accept that white collar fraud exists in Ireland.

Meanwhile, Flavin remains a free man with not the remotest chance that he will ever be charged much less filmed being led away in handcuffs.

Copy to:
RTE News