Wednesday 17 January 2018

Shane Ross: Bankers given shoulder to laugh on by regulator

Instead of bawling out the chancers who ruined us, the cowed watchdog bowed reverently before them, writes Shane Ross

WE'RE ALL IN THIS TOGETHER: Ann Nolan, Second Secretary at the Department of Finance, is heard on the latest Anglo Tape laughing with Anglo Irish Bank's John Bowe
WE'RE ALL IN THIS TOGETHER: Ann Nolan, Second Secretary at the Department of Finance, is heard on the latest Anglo Tape laughing with Anglo Irish Bank's John Bowe

Shane Ross

Top civil servant Ann Nolan and Anglo's John Bowe sound like a bereaved couple on the latest Anglo tapes.

"You have all my sympathy. I understand exactly where you are coming from," oozes Nolan, the woman currently tipped for the Financial Regulator's job, after Bowe sighs, pleading that he is "beat, totally beat" after six months of struggling for the cause of the rogue bank.

"Oh, join the gang," replies Nolan, laughing. They would all sink or swim in this together.

Such chumminess in the face of national calamity is difficult to stomach. It occurred just before Christmas, on December 23, 2008. Four days earlier, David Drumm had departed in disgrace.

Three weeks later, Anglo collapsed completely. The shares were suspended, worthless, having tanked by 98 per cent in 2008. Small shareholders were left destitute. The bank was nationalised.

Yet Nolan, one of the most senior guardians of the national finances, is frequently heard laughing on tape with Bowe, one of those responsible for the disaster that brought the nation to its knees.

They were united against the outside world. Both bemoaned the downgrade of Anglo by ratings agency Standard & Poor's. They comforted one another by claiming that the agency's negative report was pre-ordained, that the authors would not listen to anyone with a different angle. They complained that S&P had made up its mind before consulting anyone. Of course, we only had to wait a couple of weeks to know that S&P was right.

The Department of Finance and Anglo were circling the wagons. The duo, supposedly pursuing different agendas offering checks and balances, echoed each others' sentiments. The tapes show that Nolan was even completing Bowe's sentences for him.

God knows, should Nolan not have been challenging Anglo's solvency?

Should she not have been quoting the S&P views about the rogue banker and defending the Irish taxpayer from the fate that was about to befall us?

Instead, after asserting that the outside world was to blame, Bowe was unctuous when thanking Nolan for her assistance: "Anyway, look Ann, I just want to say I appreciate your help."

You bet he did. There was a lot of laughter on the line. In turn, Ann was optimistic about the future, wishing John a happy Christmas. She was off for a week.

Meanwhile, Anglo Irish Bank and Ireland itself were going down the tubes.

The dialogue between the two is another eye-opener, revealing the hideously close relationship between top mandarins and the banking cowboys. The tapes suggest that the civil servants were unmoved in the face of external alarm bells, prepared to back the native pirates against the verdict of independent outsiders – such as the cruel markets and the ratings agencies.

The Fine Gael/Labour government's reaction to the tapes has been simple: Hunt the whistleblower. The extraordinary decision of the liquidator of Anglo to chase the source of the leaks is infantile. His or her identity is of little consequence in comparison with the awful realisation from today's tapes that the civil servants displayed signs of Stockholm Syndrome as far as Anglo was concerned.

Finance Minister Michael Noonan's response to the tapes – that journalists are "mucking around in garda business" – is numbing. Tom Lyons, Gavin Sheridan, Paul Williams and others have recently filled a gap that should make Garda Commissioner Martin Callinan blush at the failure of his force to flush out the guilty parties in the long five years since the bank guarantee. The identity of the whistleblower is utterly irrelevant – though he or she should be given a hero's welcome in Aras an Uachtarain. Judging by his recent noble words, President Michael D Higgins himself does not share the Government's eagerness to hunt down the hero.

The other taped talk – between Bowe and the regulator's Prudential Director Con Horan – shows a similar relationship. Horan is obviously getting it hot and heavy from bankers at home and abroad that Anglo is breaking a solemn agreement not to exploit the bank guarantee when selling its products. Ulster Bank and HBOS (two banks not covered by the guarantee) were known to be fuming at Anglo's State-assisted competitive edge. On the tape, Horan is pleading with Bowe to ease up on the hard-sell.

He is almost apologetic: "I was hoping," says Horan, "if you could come down to me for 15 to 20 minutes this afternoon." He went on to explain to Bowe that "I need to just understand your strategy a little bit better".

Horan should be bawling the Anglo man out, ordering Bowe to stop flogging Anglo products with this guarantee as a prohibited bait. He should be imposing heavy fines on the spot. Instead, he asks Bowe if he could drop by at 2.30 for a chat! He explains to Bowe that he may be "over-egging" the guarantee, pissing off competitors to a point when the golden goose of the bank guarantee will be killed.

Instead, at a time when European leaders were blowing a fuse about Irish bankers using the guarantee to poach funds away from competitors without such security, Horan volunteers that "we could blow this up at European level". There is little sense of urgency.

The regulator should have been threatening fire and brimstone on Anglo, demanding an immediate cessation of its sharp practices. That was not the way regulation worked in Ireland. The regulator was the supplicant, the banker the boss. Horan seems more cowed by his colleagues in the domestic banks than by the collected crowned heads of Europe.

It is obvious from these new tapes why David Drumm and John Bowe were caught on an earlier tape mocking the regulator, Paddy Neary. It is clear why they had no fear of the Department of Finance. They believed they could walk on water. The weak mandarins and feeble regulators encouraged them to believe they were masters of the universe.

Irish Independent

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