Thursday 26 April 2018

Cardiff has set cat among the pigeons as guarantee blame game hits fever pitch

Kevin Cardiff arriving at the Oireachtas Banking Inquiry
Kevin Cardiff arriving at the Oireachtas Banking Inquiry
Daniel McConnell

Daniel McConnell

One was the ultimate insider, who was at the helm of Ireland's greatest financial disaster and departed his job in a cloud of controversy. The other was the quintessential outsider, who was brought in to save the day only to depart long before his term was up.

On Thursday, both Kevin Cardiff and John Moran went before the Oireachtas Banking Inquiry to account for their actions.

Four years after he was hung out to dry by some of his political masters, a refreshed-looking Cardiff returned to Leinster House in a bid to restore his reputation, which took a considerable hammering back in the day.

While officially he was honoured to become Ireland's representative at the European Court of Auditors, the truth was he was shipped out of the Department of Finance by a minister and a Government who wanted to wipe the slate of the past away.

The episode in which €3.6bn was mistakenly accounted for by his department brought him into the epicentre of a political crisis and his departure for Europe sparked considerable controversy.

So the Kevin Cardiff who appeared at the inquiry was eager to share his take on events and came out swinging during four and a half hours of testimony. His appearance before the inquiry was much anticipated, heightened further by the leaking of his evidence to the national media last weekend.

A career civil servant, Cardiff is the ultimate insider who rose through the ranks to be one of the key players in the Department of Finance during the country's worst ever financial crisis.

He was there on the night of the bank guarantee, he was to be elevated to become Secretary General by Brian Lenihan in 2010, and he led the talks around Ireland's Troika bailout in November of that year.

In sharp contrast to previous witnesses who countless times "couldn't recall" or "didn't know", Cardiff was a compelling, engaging and willing witness. He said he had refrained from public comment for several years in order to give his evidence to the inquiry and seemed energised by the opportunity to spill the beans.

He repeatedly invited the 11 committee members to ask anything they wanted, even if the overly officious Chairman Ciaran Lynch sought to rein in the more eager inquisitors.

He took aim at the weak financial regulator, the banks, Jean Claude Trichet and the ECB and also the "dark forces" who pushed Ireland into the bailout. We learned a lot from Cardiff, who told us that he and the then government were lobbied hard by big business, senior bankers and former Finance Minister Charlie McCreevy for several months before the guarantee that such an intervention was needed.

We also learned that he and Lenihan were opposed to a broad all-inclusive guarantee on the night of September 29 2008, but that Cowen seemed to have his mind already made up.

We learned that Lenihan would change his mind on the night following a private chat with Cowen. But we also got a sense that Irish Life and Permanent was also on the verge of going bust within two days had the guarantee not been introduced.

Most importantly, we learned that the banks brought in the terms of a guarantee and, to all intents and purposes, got what they wanted.

Cardiff was of course keen to spell out that the €440bn guarantee ultimately given was less than what the banks had asked for because of his interventions on the night. He said had he done what was asked, the banks would have been laughing at the Government. But taking a step back, that was a mere pyrrhic victory and hardly worth celebrating.

Later on the same day, the inquiry heard from John Moran, the outsider brought in by Michael Noonan to put manners on the embattled Department of Finance.

Moran recalled how the ECB repeatedly blocked attempts by Noonan and the Government to burn bondholders.

Yet Moran, during his tenure, became a source of controversy given his rocky relationship with the IBRC over the Siteserv sale, and did not last long and resigned his post in May 2014.

Undoubtedly, the establishment, including many of the lifers within the department, were not sorry to see Moran shuffle off the scene so soon, but is that necessarily a good thing?

Cardiff's appearance only heightens the anticipation around the appearance before the inquiry of former Taoiseach Brian Cowen as the finger of blame continues to be passed around.

Mr Cowen must address the following questions when he appears: firstly, why was he so committed to going with such a broad guarantee when his own finance minister and a considerable amount of expertise on the night argued against it?

Secondly, just who lobbied Mr Cowen in the months running up to the fateful night to introduce the guarantee?

Thirdly, why did Mr Cowen feel the need to ring independent financial consultant Alan Gray on the night but not feel the need to convene a full Cabinet meeting?

Fourthly, just what did Mr Cowen say to Mr Lenihan when the two men left the room for that private conversation?

We won't have long to find out the answers as Cowen appears before the inquiry in early July.

Hopefully, he will be as forthcoming in his evidence as Cardiff was.

Irish Independent

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