Saturday 24 March 2018

Taking some positives from the Banking Inquiry fiasco is tough but not impossible

There must be a better way to look at matters of public interest than Oireachtas teams. Photo: Aidan Crawley/Bloomberg
There must be a better way to look at matters of public interest than Oireachtas teams. Photo: Aidan Crawley/Bloomberg
Richard Curran

Richard Curran

It is difficult to take positives out of the shambles that is the Oireachtas Banking Inquiry. The negatives jump out. In fact public confidence in the report is now so low, many will feel that it matters little whether the final report is published at all.

To some extent the circumstances of the inquiry facilitated such an apathetic response. But members of the inquiry themselves have added to that malaise. The legal cul de sac they went down toying with taking evidence from David Drumm, was a particularly big error.

The apparent politicisation of the process was another. Allowing their dissatisfaction with the initial draft report turn into a media circus and "race against time" to make amendments probably finished off any remaining veneer of authority or credibility.

Many will focus on the cost (around €5m) of the inquiry. Yet, I don't think in the overall scheme of things it is such a large sum given the importance of the role the inquiry was supposed to play.

Unfortunately, it seems like a lot of money when one considers the outcome. Two committee members will not sign off on it. That is hardly surprising and not really a big deal.

The problem is that once the members let it be known just how unhappy they were with the initial draft and how many amendments they wanted, they robbed the process of credibility.

The report, which looks like it will be published, is shorter than they wanted. The draft has no executive summary. Members appear to have signed off on it, as a matter of political pragmatism rather than as an affirmation of the quality of its findings.

Much of the media circus about the members' "race against time" appears to be based on their disappointment at the strength of its initial conclusions and what may have been omissions. We know they wanted a separate chapter added in on the role of external auditors. That seems perfectly reasonable and would make you question how much had been devoted to that topic in the original draft.

The really sensitive issues for the members are those around government policy in the run-up to the collapse, the bank guarantee and the response of two governments in the aftermath of that guarantee.

Yet, the scope for real meat in the report was around the inner workings of the banks, their auditors, and the failure of regulation. Perhaps details of exactly when and how the banks went off their heads on property lending, don't make the best soundbytes, but they would provide genuinely valuable insight.

The role of non-executive directors; the structure of bonuses, not just to chief executives but to lending managers; how banks dealt with dissenting views internally; and the nature of the banks interaction with the regulators, are all areas that are worth pursuing.

But an inquiry needed to go further. It needed to provide specific examples of where banks and regulators fell down on these issues.

We know the inquiry had access to tens of thousands of documents, many of them internal bank documents, but they were not prominently in evidence during the public sessions of the inquiry.

I might be criticised for knocking the report before it has even been published. But I think most people know how it will play out. It will provide a general narrative of how it all went wrong, without finding fault with anyone, because it simply cannot for legal reasons.

It will use the details of months of public hearings to paint a picture of what went wrong, that is very similar to what was said by Patrick Honohan in his report into the failure of regulation, and Peter Nyberg's report into the failure of the banks and wider society.

I suspect there is very little need to send the report out in the coming weeks to the 40 or so people named in it. We know the report cannot make findings of fact against individuals so it can only express an opinion about where people messed up. They in turn can refute that opinion, and the report's view is neutralised.

It cannot say that Mr X wrecked the bank or was negligent in their job. Mr X will disagree and the inquiry will have to back off and water things down even further.

And so that brings me to the search for positives out of the entire process. There are some slim pickings there but they are worth mentioning.

1. The banking collapse cost €64bn. There had to be some kind of public inquiry or process of public accountability. Doing nothing was not an option.

2. Members of the public, who forked out the €64bn, did get to see and hear the main players answer questions. Citizens can make up their own minds about who they believe and who is to blame, even if legal constraints prevent the investigating committee from doing that.

3. Volume 3 of the report apparently does contain large amounts of supporting evidence and documentation. The inquiry has been a mechanism to bring that evidence into the public domain as it will be published with the report. This will be very important in the future in understanding what went on. Without the inquiry it never would have seen the light of day.

4. Apparently the report will recommend that some kind of legal action be taken against the ECB in relation to pressure applied on Ireland not to burn bondholders. I wouldn't bet on a legal action ever actually happening.

It would involve taking the ECB to the European Court for breaching its remit in the form of letters and other communications it dispatched to the Irish government over burning bond holders and seeking a bailout.

It is a way of putting on record that we in Ireland are still pretty sore about that, and perhaps that has a symbolic value. But the case will never be taken.

5. The final positive might be how the "Keystone Cops" approach taken by the inquiry in recent weeks highlights the weaknesses in our investigative systems. The other banking reports were anonymous. The Banking Inquiry is toothless. There is a clear need for a better way of investigating a matter of such enormous public interest. Oireachtas teams made up of cross-party TDs and Senators is not the best way to do it.

Perhaps after the country's next monumental economic cock-up we will have the tools to investigate it a bit better.

Don't hold your breath.

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