Friday 19 July 2019

Tim Pat Coogan: Poking through legacy of 'greed is good' creed, in ashes of Bank Inquiry

Actor Michael Douglas who immortalised the “greed is good” creed as Gordon Gekko in ‘Wall Street’
Actor Michael Douglas who immortalised the “greed is good” creed as Gordon Gekko in ‘Wall Street’

Tim Pat Coogan

The Banking Inquiry saga and some related events have borne out the truth of Bernard Shaw's pronouncement that a Government Commission reminded him of a man going to the lavatory: "It sits. For a time nothing is heard. Then there is a loud report and ... the matter is dropped."

The Government was fully aware of its limitations when it set it up. Soon after taking office it held, and lost, a poorly fought referendum to change the Constitution so that Dáil committees could investigate scandals to some purpose, making recommendations as to fact, with a view to holding those responsible accountable for their actions.

One of the principal reasons for the referendum's failure, apart from the retarding effect of Fine Gael's legal elites, was the publication of a letter signed by eight former Attorneys General, stating that if the referendum succeeded it would interfere with a man's right to his good name and the independence of the judiciary. This intervention, combined with a general mistrust of politicians, because of the chaos they had brought on the country with the powers they already had, helped to sink the referendum .

That chaos, let us never forget, was the most damaging in the State's history since the civil war, hugely elevating suicide levels, and those of emigration, un-employment and homelessness. But the litany of disaster continues. Last week as the Banking Inquiry members struggled to cobble together a report, there arrived in the letterboxes of those unlucky enough to be AIB shareholders a communication from the bank which stated that it intended to "simplify and more closely align our capital structure with market norms and investor expectations".

This, it said, " should position us for a transition from State ownership to private sector ownership over time".

Decoded this gobbledygook means, in effect, that with the collusion of the Government, AIB is preparing for a sell off, which will probably mean huge job losses, but will get the bank off the State's books.

The ordinary shareholders - members of the public, pensioners who invested their after-tax savings - saw the share price close at half of one per cent.

Many of these shareholdings were purchased at a time when AIB shares cost between fifteen and twenty euro.

As Liam Collins revealed in a brilliant series of articles in the 'Sunday Independent', all this goes back to the time when AIB was changing the face of Irish banking with a whole hearted espousal of the "greed is good" philosophy of Gordon Gekko. In 2002 AIB's then CEO, Michael Buckley, boasted that AIB would "set the standard for 21st century community banking".

He was right. Even prior to the final collapse, the Gekko philosophy had already spawned a litany of AIB scandals: Insurance Corporation of Ireland, Faldor, Allfirst and the DIRT Inquiry.

The DIRT Inquiry was brought about largely because of Collins and a whistleblower within AIB, Tony Spollen. Spollen had produced an internal report, critical of AIB's methodology which the bank rejected.

However the DIRT Inquiry did reveal that the Revenue Commissioners had been turning a blind eye to practices throughout the banking sector, such as those of the Kerry farmer who gave his address as "Main Street, New York" and was thus able to participate in a bogus off-shore account that enabled him to avoid paying tax on his wealth.

It was one of the worst financial scandals in the history of the State and one would have thought that drastic action would have been taken against all those responsible.

But the simple truth is that the Irish legal system as it stands is not fit for purpose. It is too expensive and it cannot cope properly with the necessary financial oversight and interventions required of a modern state.

The Public Accounts Committee, for example, is severely limited in its powers. One of the most notorious controversies of recent times was that involving Rehab which led members of the public to withhold subscriptions from charities generally that Christmas.

Solicitors were also able to point to the fact that the committee had been separately warned by the parliamentary advisor to Leinster House that in other cases, in attempting to protect the taxpayer, it had crossed the line of its remit.

As far as I am concerned the only worthwhile thing to come out of the Banking Inquiry was the testimony of the American expert, Professor Bill Black, who told the inquiry that he favoured jail sentences for culpable bankers and warned the inquiry that Ireland was still vulnerable to the practices which had caused the financial crisis. Financial regulation had not been sufficiently reformed. He further pointed out that the inquiry was fundamentally flawed because of the constitutional limitations.

But, did we really need an expensive banking inquiry to tell us that? The requirement is for legislative change and another constitutional referendum, this time carried out vigorously and victoriously so that the Dail, on behalf of the little people, can hold the big boys accountable.

'1916: The Mornings After' by Tim Pat Coogan is available in bookshops

Irish Independent

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