Monday 16 September 2019

The night we were all mugged for €8bn

When the ECB chief threatened a 'bomb' in Dublin, Noonan caved in on bondholders, says Gene Kerrigan

'Was Brian Lenihan really a liar? Whose word can we trust? Why the silence? Does the Dail have any function any more?'
'Was Brian Lenihan really a liar? Whose word can we trust? Why the silence? Does the Dail have any function any more?'
Gene Kerrigan

Gene Kerrigan

Was Brian Lenihan really a liar? Whose word can we trust? Why the silence? Does the Dail have any function any more?

And when the State is under direct, explicit threat, what is the duty of a government minister?

On March 31, 2011, shortly after the election of the current Government, the late Brian Lenihan rose in the Dail to reply to a speech by the new Minister for Finance, Michael Noonan. The debate was on recapitalising and restructuring the banks.

In the last sentence of his speech, Lenihan noted that there had been no reference by Mr Noonan to proposals for "burden-sharing". It was considered surprising that Noonan had made no reference at all to this matter.

Fine Gael had, before the election, pledged to introduce burden-sharing. On becoming Taoiseach, Enda Kenny renewed that pledge. Word had gone around as ministers gathered their courage and prepared for a decision on the issue.

In fact, at its meeting a couple of days before Noonan's speech, the Cabinet had decided to implement burden-sharing.

Perhaps we should define 'burden-sharing'. The term sounds as though the State has a debt burden and it wants to force private investors, the bondholders, to take part of it.

It's actually the other way around. The burden of massive bank debt was totally a private sector matter. It was forced onto us by Messrs Cowen and Lenihan and the European Central Bank.

The term 'burden-sharing' is a polite way of saying investors should be forced to take on some little part of their own debt. They should bear some of the consequences of their gambling greed.

Some of us would say that none of it is our debt and we will not pay a cent of it. But that's not a currently fashionable position.

As the Dail debate continued on March 31, 2011, Michael McGrath of Fianna Fail and Pearse Doherty of Sinn Fein referred to Noonan's silence on the bondholders.

Doherty made seven references to burden-sharing. McGrath mentioned: "Mr Jean Claude Trichet and the European Central Bank, who appear to have had the final say on this matter." Even McGrath didn't know how accurate his remark was.

Catherine Murphy, Independent, said the minister's failure to make any reference to burden-sharing was "completely unacceptable".

She said: "We are constantly being told about our EU partners but it does not feel like a partnership. Not only are we paying back the debt (for the banks), but we are also being criticised for complaining about it."

Across the chamber, Michael Noonan listened in silence to all this. In his reply to the debate, he ignored the repeated references to burden-sharing. He offered no explanation as to why the Government had reneged on its pledge.

Subsequently, rumours emerged about what happened. Jean Claude Trichet, President of the European Central Bank, it was said, had threatened Noonan.

In a phone call, it was said, he threatened that an economic bomb would go off in Dublin if the Government dared force bondholders to bear the consequences of their own failed gamble.

The expression plainly meant that the ECB would act to severely damage the Irish economy.

Last April, Jean Claude Trichet came to Dublin. He refused to appear before the Banking Inquiry. Instead, he invited members of the Inquiry to appear before him at the "Institute" of International and European Affairs.

Too often, the word "institute" is used to give a spurious gravitas to groups engaged in propaganda. The IIEA is a 'think tank' that helps market the European Union.

Trichet sat at a table overlooking an audience of politicians. TDs looked up at him and were allowed to ask some questions when he'd finished his lecture.

And he misled them. He made a liar of the late Brian Lenihan, denying Lenihan's claim that the ECB threatened to damage the Irish economy if Lenihan didn't follow orders.

When asked about the threat to "bomb" Dublin, he denied it. He said that was "totally not in line with the relationship I had with your government".

Last Thursday, Michael Noonan told the Banking Inquiry that Trichet threatened that a bomb would go off in Dublin.

Noonan said that he had intended telling the Dail on March 31, 2011 that he was imposing 'burden-sharing' on investors. On his way to the chamber, he had to take a phone call from Trichet, who made the threat. Trichet sounded "irate".

As a result, Noonan changed his speech, dropping the burden-sharing references. He was 10 minutes late entering the chamber.

What was Noonan's parliamentary duty?

He was required to answer the issues raised in reply to his Dail speech - including the questions about his failure to say anything about burden-sharing. This would have required him to disclose Trichet's threat.

Noonan ignored the matter.

The situation now was that the president of the European Central Bank had massively exceeded his powers. He entered the political arena. He threatened to disrupt the Irish economy if the sovereign Irish government implemented a policy on which it had sought and received an electoral mandate.

He reversed a decision of the Irish Cabinet.

Noonan chose to keep the threat secret, as Trichet no doubt assumed he would. By doing so, he deferred to the illegal use of the ECB's powers. There were no consequences for Trichet when he subverted the Irish Parliament.

Last Thursday, Michael Noonan denied that Trichet subverted our parliament.

"The word 'threat' was never used by myself or Trichet," he said. "It was a conversation - he was pointing out facts as far as he was concerned."

'Hand over your money or you're dead' is not a conversation when someone puts a knife to your throat. It's a threat. The fact that the word threat isn't used is irrelevant.

According to Ajai Chopra, former deputy director of the IMF, that threat cost this State €8bn. This was not a victim-less crime. We were loaded with costs, state services were asset-stripped, with devastating consequences for citizens.

The State was under a direct, explicit threat from a powerful man who had no right to make that threat. In denying making a similar threat to Brian Lenihan, he made a liar of the dead man.

I believe Lenihan.

All of this information was withheld from parliament.

Noonan discussed it all with Enda Kenny as it unfolded. Both were party to the cover-up of the threat.

There are circumstances in which a government minister must mislead - if only by withholding relevant information - as Michael Noonan did on March 31, 2011. He and Enda Kenny might have wanted to put off any irretrievable action until they found some way to defeat the ECB threat. They could disclose the threat at a later stage.

This isn't what happened. They accepted Trichet's right to threaten us. In the summer of 2012 they thought they got a reward, a supposed write-down of the debt at some future stage. It was a sham.

When Trichet misled the Banking Inquiry five months ago, when he made a liar of Brian Lenihan, they stayed silent.

That's how Irish parliamentary politics works. Politicians deprive parliament of essential information, without which neither we nor the Oireachtas can assess our true circumstances. Cover stories are created and matters of State are turned into pub gossip.

A politicised central bank in Frankfurt forces the State to pay €8bn it doesn't owe, the political establishment turns a blind eye.

TDs with strong opinions on democracy simply zip their gobs.

Again, the silence of the lambs.

Sunday Independent

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