Killing the Golden Goose

There was a glowing account of California tech firm SanDisk in last Friday’s Irish Times. The firm set up in Ireland in April 2005 and within eight months had taken in revenues approaching €762 million and, according to the article, had “helped boost employment in Ireland.

But the firm had no direct employees whatsoever in 2005 and yet its newly established Irish base accounted for nearly half of SanDisk’s revenue of $.2.3 billion for that year. Since last April the firm has increased its staff from 12 to 35, hardly a massive boost to national employment.

All very odd and mysterious until TCD Prof. Anton Murphy enlightened everybody on RTEs This Week programme last Sunday. (First item) In effect, SanDisk, along with numerous other multi-nationals, is using Ireland as a profit/tax laundering base to avoid paying billions in tax obligations.

It should be emphasized that there is nothing illegal about these activities but as Prof. Murhpy says they are giving Ireland a Cayman Islands type financial reputation and could eventually “kill the golden goose that’s laying plenty of golden eggs here.”

Personally, if I was a Cayman Islands citizen I would consider it an insult to be associated with the ‘Wild West’ financial culture of Ireland.

In an echo back to the DIRT and Ansbacher scandals, Prof. Murphy says that the Government, political parties, the IDA and other State agencies are effectively colluding in this profit laundering but because of various short term interests nobody is saying anything – Why am I not surprised?

Powerless warning

Hilarious to witness the Competition Authority flexing its scrawny muscle in a warning to Food Drinks Industry Ireland (FDII) and the Irish Auctioneers’ and Valuers’ Institute. The authority has warned the two groups about recent indications of price rises.

The warning is hilarious because we know from the most recent investigation into the cartel at Irish Ford Dealers Association that the authority can only afford to carry out one investigation at a time. That particular investigation consumed all the authority’s resources over a three year period.

Despite the best efforts of staff at the Competition Authority they have no hope of dealing with the greed and skullduggery that is virtually endemic throughout Ireland unless they are properly funded

Voice in the wilderness

As the latest challenge to the Planning Tribunal (now in its 10th year) rumbles along we are constantly assured by our politicians that these tribunals are lancing the boils of past corruption, that all that kind of skullduggery is history due to a raft of powerful new legislation. So what is Cllr. Martin talking about?

I have read reports about controversial zonings and proposals for development in Counties Laois Meath, Wicklow and Kerry.
We have similar controversies here in Co Monaghan.
These Planning Controversies should be an election issue in every constituency. There should be political consequences for the political parties that permit their members in Local Government to engage in bad planning and irresponsible zoning of land.
People should think before voting for political parties that engage in performing favours for individuals rather than acting in the public interest.
I would like to form an alliance with anybody anywhere in the country who is worried about the following:
* The power of elected councillors to zone land for development.
* The pressure on farmers and rural Ireland to be part of the house-building frenzy.
* The destruction of our most beautiful scenic areas.
* Urban Sprawl, whether in Dublin or Galway, Cork, Limerick or elsewhere.
* Traffic Congestion.
* The impact of bad planning and land use zoning on our Quality of Life.
* The poor building standards produced by some in the Construction Industry.
I invite people to contact me.
CLLR. VINCENT P. MARTIN (IND.),
CONSTITUENCY OFFICE,
CARRICKMACROSS,
CO MONAGHAN

Low quality political leadership

Here’s the story of the West Link in a nutshell.

The bridge cost NTR a mere €14 million to build. In twenty years of operation they have milked a fortune from long suffering motorists/taxpayers. Now, those same taxpayers have to buy back the bridge for €600 million and into the future they will be forced to pay at least another €600 million in continuing tolls.

So who was involved in this very lucrative deal that has massively enriched big business by imposing penal costs on taxpayers?

Those familiar with how our banana republic is run will not be surprised to learn that George Redmond, the corrupt former Dublin Assistant City and County Manager signed the contract in company with the then Environment Minister Padraig Flynn.

To top off the sleazy deal, the bridge was opened by none other than the king of corruption himself, Charles Haughey.

The whole sorry saga stands as a potent symbol of how a country can go rotten when it is greedily exploited by low quality political leadership.

When are we going to kick 'ass?

According to the Comptroller and Auditor General (C&AG), National Toll Roads underpaid the State by nearly €2 million in 2003/2004. The director of NTR, Michael Walsh, did what the banks always do when dodgy financial activities see the light of day; he claimed it was an ‘error’.

Amazingly, or perhaps not so amazingly, this ‘error’ went unnoticed by NTR, its auditors, the National Roads Authority and the Department of Transport.

If it wasn’t for the beady eye of a civil servant in the C&AGs office, taxpayers would have been down €2 million.

But let’s face it; €2 million is chicken feed when compared to the vast amounts of cash involved in the whole M50 West Link saga. Here are some of the figures.

Up to 2004, taxpayers had paid about €1.1 billion building the M50 each side of the West Link Bridge. NTR paid an initial €14 million in today’s money for the bridge. Now the Government is giving them €600 million to buy the bridge back.

Every taxpayer in the country should stop doing what they’re doing when they hear that figure in the media and silently mouth to themselves – €600 million.

But there’s more; having paid for the road and bought back the bridge they will now, on threat of prosecution, be forced to pay for the whole thing again through continuing tolls.

This is in addition to the penal taxes already imposed on motorists. In 2004, for example, motorists paid €946 in VRT alone.

So, my question is – when are motorists/taxpayers going to kick ‘ass?

Bizarre Haugheyisms

Joseph Goebbels was of the opinion that if you tell a lie big enough and keep repeating it, people will eventually come to believe it. I think those who refuse to accept the hard fact that Haughey was a corrupt politician have a tendency to apply this dictum to themselves.

Here are just a few of what I call bizarre Haugheyisms.

Tim Pat Coogan, former Irish Press editor and historian thinks that Haughey’s ‘bad judgements’ resulted from head injuries he received in a car accident in the 1960s.

Anthony Cronin, poet and close friend of Haughey feels that it was the artist in Haughey that led him to think he was entitled to ‘patronage’.

Conor Lenihan, (Labouring under the amazing assumption that Irish politics is now free of corruption) thinks that the sheer scale of Haughey’s corruption played an important role in the clean-up of Irish politics.

So, Haughey was an artist who got a bump on the head and decided to clean up Irish politics.

Joseph would have been proud.

Corruption: An insider's account

The following article is reproduced here in full because it’s such a rarity – an insider’s frank and revealing account of a corrupt system.

In this morning’s Irish Times, Michael Casey, former chief economist with the Central Bank of Ireland provides a fascinating insight into how the rotten Irish system operates. His final paragraph is as damning as it is depressing.

The many ways of corruption

According to the OECD, bribery and corruption have serious negative effects on economies. The most important of these are the distortion of market signals and competitive forces, the inflation of spending on public procurement, the undermining of productive investment, growth and employment.writes Michael Casey .

As far as Ireland is concerned, it would seem that the bribery and corruption of the 70s and 80s was one of the factors which postponed the arrival of the Celtic Tiger. Back then, “pulling a stroke” was seen as preferable to genuine entrepreneurial activity.

The most clear form of bribery is where a favour is promised or granted by a politician, say, to a benefactor in return for money or benefit in kind. It can take other forms such as nepotism, cronyism, graft, patronage, insider trading etc. Even in the most clear-cut form of bribery, where money changes hands and a favour is given, it is extremely difficult for the legal system to “prove” anything.

Bribery is the rock that the tribunals will founder on. A tribunal could sit for 20 years and still not be able to stand up a charge of bribery. This is certainly true where money is given in cash form and there is no paper trail.

Even though the law is not much help in weeding out bribery it can at least name and shame – although it is not immediately obvious that the recipients have much sense of shame. However, there are several ways in which the favours given in return for the bribe can be fudged to such an extent that all taints of bribery are expunged.

One method is the “name-dropping” one, where the businessman gives money to the politician – usually a very senior one – because it gives him credibility among his business colleagues. It confers name-dropping rights and, of course, all-important access to the corridors of power. Over the years, many businessmen have indulged in this limited form of bribery and it is hard to imagine that their business dealings did not prosper as a result – even in cases where the recipient politician provided no direct or explicit favours. It can also be used to get a quicker or more favourable decision from parts of the public sector.

There is also the “inclusion” method, whereby the politician ensures the benefactor’s company is included on all relevant lists for tendering and public-procurement purposes. The politician may distance himself from this practice by asking his aides to draw up the lists.

If the politician decides to go further and interfere in the tendering process, this can be done in complete safety by, for example, informing the benefactor company about the quotes of competitor companies. This can be done in complete safety since there is no paper trail whatsoever: a one-minute phone call will usually suffice. Another method is “gentle pressure”. A politician may only need to let his aides know what his preferred outcome is. Some aides will read the situation correctly and do their best to deliver the result required.

The benefit can be a benefit in kind. It need not even accrue to the politician but to a friend of his or to a member of his family. This “distancing” technique adds another layer of safety. An even safer version is where the benefit is not given until retirement, when the politician (or aide) will be invited onto a board as a director or consultant.

The provision of inside information (verbally, of course) is yet another foolproof way of doing favours. When an area of a city or town is designated for tax purposes it is a very easy matter to put one’s benefactors in the know so that they can be first in to buy the properties and thereby capture the price rises.

There is absolutely nothing in law or ethical codes to stop any politician from bringing in policies to help his chances of re-election and which do little for the public good. Our history is littered with cases of politicians providing infrastructure and other public goods and services in their own constituencies without any regard for the national interest, formulating fiscal policy without any regard to the needs of the economy, and so on. There are no sanctions whatsoever to prevent or even limit such practices. This is true also of political appointments to quangos and State boards.

New methods of safe bribery are being thought up every week. No code of conduct can keep up with the ingenuity employed in circumventing it. Tribunals won’t make much difference and will ultimately represent bad value for money where the hard-pressed taxpayer is concerned. And it is disappointing to note that the proposed corruption assets bureau has somehow managed to slip off the agenda, just as the authorities have rowed back on freedom of information.

The reality seems to be that as a community we don’t really want to put in the required effort to clean out the Augean stables for once and for all. We’re just not prepared to go that far – maybe because the most likely losers would tend to be the people who make the law.

Michael Casey is a former chief economist with the Central Bank of Ireland

Defending the leader

The subject matter on last night’s Tonight with Vincent Browne was tribunals.

When Journalist Frank Connolly made the reasonable point that it was only because of the tribunal that we learned of Bertie’s ‘loans’ ‘gifts’ and ‘very unusual’ banking habits’ the usually unflappable Fianna Fail TD, Sean Ardagh lost the run of himself.

With anger and indignation on a par with Ray Burkes infamous ‘line in the sand’ challenge to those who had the temerity to question his credentials Sean defended his leader.

“It is most unfair to have this type of innuendo, rumour, false allegation without anybody being here to defend themselves. It’s the type of stuff that’s going in the papers and that Bertie Ahern has got to subject himself to month after month. Its disgraceful type of journalism, gutter press of the lowest kind…All of the stuff that you’re putting out Frank, it’s totally vitriolic type of rubbish that only a certain few journalists use and are normal with…I just can’t abide the kind of stuff they write.”

Much to my disappointment (but I suspect to Vincent’s relief) the show ran out of time.

Ireland is the kind of country…

Ireland is the kind of country where the Government monitors the opinions of citizen’s by operating a special unit that does nothing else but listens in on major talk shows and other media sources. In true banana republic fashion the unit does not work at weekends.

It is the kind of country that tolerates a rogue Justice Minister who uses police files to target and destroy the livelihood and good name of an innocent citizen.

A Minister who presides over a police force that has been discredited as largely incompetent and corrupt but which is given increasingly draconian powers to fight gang crime that the same Minister only recently declared was utterly defeated.

A Minister and also Senior Counsel whose standard of accountability leads him to suggest that a major inquiry into State corruption should be wound down because ‘we have the gist of what it’s all about’.

It is the kind of country where the Prime Minister can continue in office after revelations that he actively cooperated in corrupt practices with the most ruthless and corrupt politician in the nation’s history.

Where the same Prime Minister can describe such massive corruption as mere ‘lapses’ and refer to the downfall of the culprit as ‘a great tragedy’.

Still waiting for real action on white collar crime

“The Competition Authority’s case into the price fixing of cars consumed all their resources over the three year period it took to bring to trial”

“I believe that cartels are endemic in the industry.”

The above quotes from RTE News on Feb 9th last are indicative of how seriously white collar crime is taken in this country.

The Competition Authority is only provided with enough resources to conduct one investigation into one aspect of one industry. Meanwhile, consumers continue to be robbed of countless millions in the motor industry and any number of other cartels operating with impunity.

In addition to lack of resources for the Competition Authority, the naivety of judges is also a major contributing factor in the continuing rip off of consumers.

Denis Manning, the criminal in this case, spouted the age old excuse of age and ill health and the judge fell for it. This is despite the fact that Manning steadfastly refused to cooperate with the investigation thus prolonging it by up to 18 months.