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Bank inquiry is descending into chaos


MORGAN KELLY: One of the few who warned of the crash

MORGAN KELLY: One of the few who warned of the crash

MORGAN KELLY: One of the few who warned of the crash

The Banking Inquiry is this weekend on the verge of descending into total chaos after the emergence of a series of wounding controversies which have the potential to fatally undermine the investigation.

The Sunday Independent last night learned that Morgan Kelly, Professor of Economics at University College Dublin, who notably predicted the property collapse, has turned down an invitation to appear before the inquiry.

Professor Kelly, who has been described as the country's unofficial soothsayer, is understood to believe the Banking Inquiry would "do as little as all the previous inquiries" into the collapse of the banks and the economic crisis that ensued.

Last night a source close to the economics professor said he had not been following the Banking Inquiry closely and as far as he was concerned "it's old news."

It can also be revealed that the inquiry is deeply divided over whether to hear the proposed evidence of former Anglo Irish Bank Chief Executive David Drumm by video link from the US.

At least two inquiry team members are threatening not to take part in the questioning of Mr Drumm by video link and, as a consequence, they are now under threat of expulsion from the Oireachtas committee conducting the hearings.

It has also emerged that a whistleblower on the Banking Inquiry has raised concerns about the appointment of a member of the backroom investigation team to a position in Bank of Ireland.

The Sunday Independent understands the whistleblower has claimed this investigator, who was deciding what documents from the banks should be entered in evidence, secured a new job with the Bank of Ireland while working for the inquiry.

The whistleblower was "shocked" when it was decided to allow the investigator work out his notice period with the same access to bank documents after he had accepted the Bank of Ireland job offer.

There is no suggestion of wrongdoing by the investigator concerned but the whistleblower said they had serious concerns over the risk of a percieved conflict of interest.The claims are contained in a detailed report compiled by the whistleblower which is currently being investigated by Senior Counsel Senan Allen, who has been asked by the Clerk of the Dail to look into the allegations of wrongdoing.

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The whistleblower, supported by Fianna Fail senator Marc MacSharry, who is an inquiry member, has insisted they do not have confidence in the investigation as it is not independent of the Oireachtas.

It is also claimed by the whistleblower that they were told to "consider their position" by a senior colleague when they raised concerns over the removal of Department of Finance official Marie Mackle from a witness list. Ms Mackle is the department official who repeatedly raised internal concerns about the inflated property market and believed she was ignored.

It is also claimed inquiry investigators are under huge pressure to deem documentation provided by institutions under investigation as "irrelevant" because of the massive number of files provided.

The whistleblower claimed they heard an investigator joke that they deemed 600 documents irrelevant for "no reason".

An Oireachtas spokesman yesterday insisted that all inquiry staff went through a strict conflict of interests test before being hired. He has also insisted the committee members had the final say on who appears before hearings.

Meanwhile, several members of the inquiry face being expelled from the Committee if they refuse to attend a hearing at which Mr Drumm proposes to give evidence by video link.

Fine Gael TD Eoghan Murphy, Fianna Fail's Michael McGrath, Socialist Party leader Joe Higgins and Senators Sean Barrett and Senator Michael D'Arcy are reportedly against hearing his evidence in this manner.

Mr Murphy is understood to have categorically ruled out attending such a hearing. Mr McGrath suggested he would either not attend or would attend but not participate. A Dail motion passed last year says that members who do not attend all hearings may be expelled.

Gardai want to extradite Mr Drumm from the US to face criminal charges arising from their investigation into the former Anglo Irish Bank.

A file setting out the grounds for his extradition was sent via the Department of Justice and the Department of Foreign Affairs to the US authorities in January. Informed sources said this weekend that the extradition proceedings are "ongoing".

The file is understood to include a direction from the Director of Public Prosecutions that Mr Drumm be charged a range of offences if he is returned to Ireland. Mr Drumm is expected to challenge any attempt to force his return to Ireland.

Mr Drumm moved to the US shortly before the bank's collapse. Gardai requested to meet him on numerous occasions but Mr Drumm declined.

Mr MacSharry is also against hearing his evidence but he is precluded from questioning Mr Drumm because MacSharry family members previously worked for Anglo.

Other members of the inquiry are in favour of hearing Mr Drumm's evidence but are waiting to hear the legal advice from the Committee's lawyers, which is due tomorrow.

A spokesman for the Houses of Oireachtas declined to comment on the Banking Inquiry's invitation to Professor Kelly or his decision to reject it.

The spokesman said: "The members of the Banking Inquiry have the final say on who appears before them."

A member of the Banking Inquiry itself, meanwhile, sought to downplay the matter, saying: "Kelly turned down an invitation but it was during the initial context phase so there wasn't a legal requirement on him to attend."