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Thursday 2 October 2014

Gene Kerrigan: State dealings mired in mixed messages

'Moral hazards' of handling recession are puny compared to the elephants in the room, writes Gene Kerrigan

Published 04/09/2011 | 05:00

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Switch on the radio or TV at any time and there's a good chance you'll hear some chancer warning that we mustn't "send the wrong message" on this. Or we must "send the right message" on that. It's a gutless phrase overused by our spineless political class, our timid media, and -- it pains me to say -- our fearful citizens.

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It might be a cabinet minister, a stalwart of the banking world or a taxi driver calling Joe on Liveline. People use the phrase whenever they've a weak argument for doing something, or for not doing something. Unable to win the argument on its merits, they sidestep the main issue and warn that "the markets" or "the troika", or the wealthy or the poor or the young or the impressionable, might be "sent the wrong message".

And, today, our leaders and the media are terribly concerned about the danger of sending out the wrong message about the "moral hazard" of debt forgiveness. Any suggestion for getting people out of unpayable debt must first pass the "moral hazard" test. In short, what message will it send?

It's odd how this sending-the-right-message crack works. We all, for instance, know how to treat people who commit social welfare fraud. Spongers, cheats, criminals. The "shop thy neighbour" ethos is now firmly entrenched in our culture. In 2008, a total of 1,044 people anonymously reported their suspicions about someone they believed might be pulling a stroke -- perhaps getting the dole while doing the odd nixer. That's 87 calls a month. This year, that figure is 1,222 anonymous calls a month. More calls are now made each month than were made in all of 2008.

Mind you, social welfare fraud is real. There are criminals who organise systematic looting of the welfare system, using multiple identities and addresses -- there always have been, always will be. They are a minority. Mostly, social welfare fraud is small scale stuff, people stretched to the limit, giving in to temptation. No one gets rich on social welfare fraud. And the full resources of the State are applied to catching offenders -- so far this year, civil servants have combed through 350,000 claims, rigorously hunting down lone parents who still claim the allowance, even though their boyfriend has moved in.

Labour Party minister Joan Burton has promised a new "welfare fraud squad" that will monitor the bank accounts of welfare recipients. Joan wants inspectors out from behind their desks, hunting down miscreants, "so there is knowledge in the community" that she has a "zero tolerance" approach. Sounds like Joan wants to "send a message".

To do otherwise would create a moral hazard, the argument goes. People must accept the consequences of their actions, or they -- and others -- will be encouraged to do the same again.

Frankly, I don't have a problem with strict law and order policies. In a country where the laws are fair and the order is imposed impartially, we'd all be law and order merchants. Oddly enough (and I know this will shock you), there's a wee difference in the way laws are enforced.

For instance, for decades, the State treated tax evasion with the same negligence that bishops treated child rapists. Complex criminal frauds were arranged, in which bankers, accountants, lawyers and their wealthy clients conspired to steal from the rest of us -- and, sure, no big deal. What chance of punishment was there when bankers and top politicians were at the same game? None. How many of those organised crime figures ended up in Mountjoy? Zero.

Today, Revenue is less casual. Tax evaders are often caught. Yet it's as though it's understood that this is a gentleman's game. Ouch, old chap -- you got me -- touche! It's still the rare tax evader that sees the inside of a courtroom. They simply cut a deal with Revenue and pay over the odds. In another part of town, someone who pulled a fast one on child benefit payments finds herself in court.

No one gives a damn about the "message" this sends out.

It's now three years since the collapse of the banking system and there's widespread belief that laws were broken. Indeed, authoritative accounts of several matters -- which we won't go into here -- strongly suggest criminal activity. In other jurisdictions, cases have been investigated within months, brought to court and the law has taken its course. Here, there's a possibility that there might yet be some decisions made at the DPP's office next year -- and this will (or won't) start the process whereby the law will take its course at some point in the future.

The DPP's office says that some aspects of one major case have been almost completed, but even then there will be no charges laid "until all aspects of the investigation are complete". It's an odd way of proceeding. Imagine I'm caught with some smuggled cigarettes up my jumper. And years pass, while the state investigates whether I've also been running a protection racket, laundering diesel or trading in fake Louis Vuitton suitcases.

After three years, the State either has evidence of even one banking crime, or it doesn't. If it doesn't, lift the cloud from these people. If it has, surely the way to go is to prosecute any alleged crime for which there's evidence, and continue investigating other crimes.

But this is to ignore two things.

First, it ignores a pattern in the way the law is applied. Nowhere is that seen more clearly than in the crime of perjury. People have gone to jail because they committed perjury after being threatened that giving true evidence would get them shot. The law is merciless. Perjury, we're told, undermines the very foundation of justice -- and the message must be sent, so jail it is.

Repeatedly, over a period of years, there have been clear instances of perjury at the various tribunals. These lies concerned matters of greed. The liars were lying under oath not because they feared for their lives but because they wanted to conceal their actions. None was charged with perjury.

When Jeffrey Archer was suspected of crime in London, and Governor Rod Blagojevich was a suspect in Chicago, the courts dealt with them without fuss. A former president of Israel faced rape charges. The highest courts in this land told us Charlie Haughey should not be tried on criminal charges, apparently our system of law wasn't up to the job.

The other thing we're ignoring is the elephant in the room, beside which all other "moral hazards" are puny. That's the massive transference of tens of billions in debt, from bondholders, bankers and other professional gamblers, to our citizens, with the collaboration of the political class -- and our stunned, timid acceptance of this.

I'm not sure what I think of debt forgiveness -- I change my mind from day to day. But to hear moral concerns on the lips of politicians is a joke. Social welfare cheaters are dragged before the courts, tax evaders do deals, perjurers get a free ride and politicians know they may be deemed untriable, whatever their actions. Where does a legal system that punishes the weak and tiptoes around the powerful get the moral authority to charge anyone with social welfare fraud?

Or, to put it another way, what kind of message does that send out?

Sunday Independent

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