Regulatory Agencies

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Recently, Irish Times columnist, John Waters, did a really, really, stupid thing.

Writing in the Irish Mail on Sunday (January 22) Mr. Waters describes how he was browsing the Web when he was confronted with a pop-up competition, which, he writes ‘I was impelled to engage with’.

After clicking on a proffered answer to a quiz question Waters was invited to submit his mobile phone number which, and this is where the stupidity comes in, he did.

Immediately Waters was sucked into the murky, unregulated underworld of mobile phone rip-offs that ultimately cost him up to €200.

Now it might be argued that this could happen to anybody, indeed, it obviously happens to lots of people which is why most, if not all, phone companies are engaged in these sleazy practices.

But waters was doubly stupid because five years previously his daughter was the victim of a very similar rip-off.

She had texted her number to a TV advert which allowed criminals (Waters’ word) to steal over €150 from her account.

Waters eventually managed to get his daughters money refunded but only after a great deal of hassle and stress dealing with organisations like the offending phone company, Comreg, Regtel and the Department of Communications.

Here’s how he described the situation:

I discovered that this practice was widespread. So-called ‘premium-rater’ telephone companies were seemingly able to take money from someone’s mobile phone account with total impunity, even though no service had ever been requested and none supplied.

On top of this stupidity Waters goes on (unwittingly) to admit that he is extremely naïve and disturbingly ignorant (especially for a journalist) when it comes to his knowledge of how things are done in the (corrupt) state of Ireland.

Apparently Waters is one of those people who labour under the delusion that Irish regulators are there to serve the interests of the people, to make sure that citizens are protected against the ruthless activities of white-collar criminals.

On the off chance that Mr. Waters may at some point read this article I feel impelled to spell out the brutal reality.

So-called regulators, at best, consist of comfortable freeloaders, almost always appointed by politicians, who are expert only in drawing down their lottery sum salaries and expenses while regurgitating the same glossy annual report, which invariably paints a picture of absolute happiness across the land.

They exist for only one reason – to create the pretence that Ireland is a functional, well-regulated democracy.

These so-called regulators have just two priorities.

To do as their political masters instruct and to become expert in waffling to the general public about the great job they’re doing.

At worst, so-called regulators actively work to protect and indeed facilitate white- collar criminals no matter what the crime, no matter how much damage is inflicted on Ireland and its people.

How can I make such a statement with such confidence? Simple, I just look at the record, over, say the last thirty years, of endemic white-collar crime.

How many so-called regulators have independently uncovered white-collar crime in the last thirty years – None.

How many prosecutions have been taken by so-called regulators against white-collar criminals in the last thirty years – Very, very few.

How many white-collar criminals have been jailed in the last thirty years – Very, very few.

How many major white-collar criminals have been prosecuted and/or jailed over the last thirty years – None, absolutely none.

The most disturbing aspect of Mr. Waters’ article is his total ignorance of the depth of corruption in Ireland. The headline on his article reads:

Since when is larceny not just legal but admirable?

I can answer that question very precisely.

Larceny of the white-collar variety became legal and admired in December 1979 when John Waters’ hero, the criminal politician Haughey, came to power.

It was at that ignominious moment that Ireland and its people began the catastrophic slide into poverty and loss of sovereignty, a situation that will destroy the lives of Irish citizens for generations to come.

It is a genuine tragedy for Ireland that influential people like Mr. Waters are unable or are unwilling to accept the brutal reality that Ireland is an intrinsically corrupt state.

It is worth quoting the final few chapters of Mr. Waters’ article because it sums up his ignorance of the reality that our political system is corrupt and that the rotten system has spread the disease of corruption throughout all levels of Irish society.

It is as though many people now take it as read that Ireland has become a paradise for shysters and robbers.

I must have dropped off for a few years because I have no memory of this dramatic shift in Irish culture being discussed and ushered in.

Mr. Waters is admitting that he has no memory of the very serious political and financial white-collar crime that has been endemic over the last thirty years.

I still had these old-fashioned notions that stealing was illegal and even conceivably wrong and that the State had a responsibility to protect its citizens from crooks. Silly me.

Yes Mr. Waters, silly you.

Copy to:
John Waters

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The Director of Corporate Enforcement, Paul Appleby, is the latest high profile civil servant to announce his retirement in order to avoid losing pension and lump sum entitlements.

By leaving now Mr. Appleby will be paid a lump sum of €225,000 of which only the final €25,000 will be subject to tax. He will also receive an annual pension of €73,000.

RTEs Business Correspondent, David Murphy, who described Mr. Appleby as a ‘very important individual’ did his best to make it sound as if Mr. Appleby’s departure was an important event especially in respect of the ongoing ‘investigation’ into Anglo Irish Bank.

Nothing could be further from the truth. If Mickey Mouse is chosen to replace Mr. Appleby the outcome of the Anglo Irish Bank ‘investigation’ will be the same – nobody will be charged, nobody will be jailed.

Mr. Appleby has been in charge of this so called enforcement agency that has never, not once, managed to bring any significant charges against any significant individual or organisation in its ten year history.

The ODCE was established after a series of corporate scandals (read major corporate fraud and criminality).

It was established specifically to deal with corporate fraud and criminality, it has failed totally in its remit.

It has never, not once, managed to nail any significant individual or organisation despite the fact that financial fraud and criminality is endemic within the Irish financial sector.

The ODCE, in common with all other so called enforcement agencies in our blighted country, is a useless toothless tiger and like all other so called enforcement agencies is designed, effectively, to prevent white collar criminals being brought to justice.

As Mr. Appleby heads off into the sunset with his (lottery) lump sum and pension he may feel he deserves his rewards.

If he does then he’s delusional.

In common with many other senior civil servants who were charged with serving the best interests of the Irish people Mr. Appleby has failed in his duty.

Copy to:

Mr. Appleby

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I see the victims of the Custom House Capital fraud have been given until March 23 to apply for compensation.

Victims can claim up to a maximum of €20,000 which, of course, is mere chickenfeed in comparison to what has been lost.

Some victims have lost everything including their homes and any means of providing for themselves in retirement.

One woman lost close to half a million so twenty grand, if she gets that, will mean little.

Meanwhile, the fraudsters responsible are still walking the streets enjoying the same rights and freedoms as law-abiding citizens.

The Garda Fraud Squad is, allegedly, investigating the matter but victims would be strongly advised not to hold their breaths.

What we seem to be witnessing here is the usual response to alleged white-collar crime in Ireland.

The matter is shunted into a sideline allowing so called regulators; police and politicians to wash their hands of responsibility while the victims are left to suffer the consequences.

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The Central Bank, in an obvious attempt to cheer us all up, is to stage its very own soap opera.

Next week, three bank bosses who were on boards in the lead up to the 2008 financial crisis, must convince the Central Bank’s Fitness and Probity panel that they are capable of running their respective banks.

It’s all a great joke, of course. None of these gentlemen will suffer in any way for their gross incompetence.

But if, by some miracle, they’re told to pack their bags, those bags will be filled with a couple of million courtesy of the taxpayer.

Next week’s farce is only the first episode in this new soap opera.

According to sources it could be several months before the authorities decide whether there are grounds for a full investigation.

And if, by some miracle, there is an investigation, it will be many years before it comes to any conclusion.

And if, by some miracle, these gentlemen are found guilty of some wrong doing their case will be handed over to the ODCE to be considered for another few years.

And if, by some miracle, the ODCE actually manages, for the first time, to complete an investigation into allegations of serious white-collar crime a file will be sent to the DPP for consideration – for an indeterminate number of years.

And if, by some miracle, anybody can remember what the case was about, and if all the files are not mysteriously lost, and, indeed, if any of the bankers are still alive, they may face prosecution and be thrown in jail.

Ah no, I’m only joking about that last bit.

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A 47 year old man, Terence Maughan, has been jailed for one year for defrauding the state of €14,000 in dole payments.

Maughan, a father of six with no previous convictions, committed his crimes between 2008 and 2010.

State enforcement authorities left no stone unturned in their efforts to bring this man to justice.

An alert social welfare inspector noticed something suspicious and after confirming his suspicions by checking some CCTV footage he immediately called in the Gardai to assist in indentifying the culprit.

A joint Garda/Social Welfare surveillance operation was set up which resulted in the apprehension of the fraudster.

As I say, no stone left unturned. There followed prosecution, a court appearance and jail.

The presiding judge was in no doubt about the seriousness of the crime.

The court has a responsibility to deter others from embarking on the same crime.

Meanwhile, those responsible for the theft of €66 million in the Custom House Capital fraud are still walking around enjoying the same freedoms and privileges as law abiding citizens.

This multi-million Euro fraud came to light around the same time as state authorities were tracking down Mr. Maughan but, unlike Mr. Maughan’s case, there was no effective response by state authorities.

It is now four months since a High Court judge ordered all reports on the CHC fraud be sent to the Director of Corporate Enforcement, the DPP, the Garda Commissioner and Revenue.

Since then – Silence.

The judge who sentenced Mr. Maughan commented that:

Welfare fraud was an easy thing to do until now.

We can see from the CHC case and many other similar cases that white collar crime has always been and remains an easy thing in Ireland.

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Patricia Quinn and her children are claiming that the huge loans made to them by Anglo Irish Bank are invalid because they are tainted with illegality.

Obviously these claims are untrue.

I’m sure that if state authorities were aware of even the slightest hint of wrongdoing by those responsible for running Anglo there would be hell to pay.

It’s been three years now since Anglo got into trouble and not a single official has been charged with any wrongdoing

So obviously these outrageous claims are nothing more than sour grapes by the Quinn family.

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Anonymous tip-offs to the Department of Social Protection regarding suspected social welfare fraud increased from 600 in 2005 to over 16,000 this year (Irish Times).

Minister for Social Protection Joan Burton suggests two reasons for this sharp increase.

A cultural shift in Irish attitudes towards breaches of the law and, principally, a strong feeling in people that limited resources should be used for the benefit of those most in need.

I suspect the Minister is happy to occupy this cosy frame of mind regarding human psychology rather than facing the more sinister, and more likely reality that the increase is due to a deep resentment that a neighbour or acquaintance may be getting more than the informer.

Governments often exploit this dark side of humanity as a useful means of doing their dirty work.

The most extreme example being Nazi Germany when even parents informed on their own children and vice versa.

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Ireland’s banana republic reputation, when it comes to financial regulation, has spread to Australia.

It was 2007 when The New York Times dubbed Dublin the wild west of European finance.

This was the opening line by Emma Alberici, European correspondent for the Australian current affairs programme AM (Read and listen to Alberici’s report here).

Alberici was reporting on the latest failure of Ireland’s so called Financial Regulator to enforce the law.

Jonathan Sugarman was the head of risk management at the Dublin office of Italy’s UniCredit bank which runs a $50 billion operation in Ireland.

Sugarman was forced to resign after his chief executive consistently asked him to break the law.

Clearly, Sugarman’s boss was confident that he operated in a jurisdiction where financial law enforcement does not exist.

The Central Bank told the Australian broadcaster that it was still examining the allegations first brought to it by Sugarman four years ago.

Here’s what Sugarman had to say:

I left the bank’s offices, I walked down to the regulator’s office, I wasn’t going to leave it to anyone to deliver it but myself, and nothing happens.

That is like walking in to a police station with a knife with blood on it and saying I’ve just killed someone and you expect the police to say well where’s the body? Where’s the person? What have you done? And they just say, fine, just don’t do it again.

And that left me dumbfounded.

The bottom line is that the Irish Financial Regulator does not actually regulate, it does not enforce the law.

For many years now it has, effectively, operated a policy of telling white collar criminals to pay back any money robbed and not to do it again.

This irresponsible attitude has resulted in massive hardship and loss for countless thousands of Irish citizens.

The policy has also played a major role in the loss of Ireland’s financial sovereignty and the impoverishment of generations of Irish citizens to come.

Copy to:
Financial Regulator

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My local representative, Fine Gael TD David Stanton, has replied to my request for a Dail question on the CHC scandal.

Dear Anthony,

Thank you for your email below. Just to let you know I tabled the below Dail question to the Minister for Finance today, so should have a response next Wednesday evening. I will pass it on to you as soon as I receive it.

Best regards

David Stanton TD

Written Question from David Stanton TD

To ask the Minister for Finance if he has received a report from the Financial Regulator in 2009 regarding an investigation into a company (details supplied); if it is intended to publish same and will he make a statement on the matter.

(Details: Customs House Capital)

(See below for my letter to deputy Stanton).

6th December 2011

Dear Mr. Stanton,

In early 2009, after receiving information from an unknown source, the Financial Regulator carried out an investigation into a wealth management company called Customs House Capital (CHC).

Apart from some supervisory and organisational issues the Financial Regulator found no significant problems with the company. The Financial Regulator adopted the following strategy – I quote.

Following the identification of these supervisory concerns, related to compliance and organisational issues, the strategy was to encourage CHC to identify and engage with potential buyers for the firm, which would be the best outcome to protect client investments and funds.

CHC took up this advice and sold its non-property assets to a company called Appian Asset Management.

Within a very short time Appian Asset Management discovered that CHC had been engaged in major fraud and immediately informed the Financial Regulator.

In 2010 the Financial Regulator carried out yet another investigation into CHC and found that major fraud had indeed been going on within the company.

Full details of the 2010 investigation are available to the public on the Financial Regulator’s website.

I requested details of the (alleged) 2009 investigation and was informed that this report was not available to the general public under secrecy laws. (Section 33AK of the Central Bank Act, 1942 (as amended).

The conduct and conclusions of the 2009 report are absolutely crucial in determining whether the Financial Regulator is, as claimed by this government and its predecessor, truly reformed and fit for purpose.

I request that you ask the following questions in Dail Eireann.

Why is the 2010 report legally available while the 2009 report on the same company, on the same matter, is deemed to be a state secret?

Why did the (alleged) 2009 investigation by the Financial Regulator fail to detect the major fraud that was going on right under the investigator’s noses?

Has the Financial Regulator taken any action to determine why its staff failed to detect what a company (which was not conducting an investigation) detected almost immediately on examining the books of CHC?

Why has there been no arrests arising from this matter? It is a verifiable fact that similar cases, in functional jurisdictions, quickly resulted in arrests, charges and prosecutions.

The following is a quote on the matter from High Court Judge Mr. Justice Hogan delivered on 28th October 2011.

In fact, the report describes a long litany of general misfeasance and wrong-doing, ranging from the systematic deliberate misuse of funds, gross impropriety, corporate misfeasance and false accounting to trading in a fraudulent manner.

Yours etc.

Anthony Sheridan

This request has also been forwarded to a representative of every political party.

Copy to:
Financial Regulator

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The Custom House Capital (CHC) false accounting and fraudulent trading scandal is a very serious matter but, unfortunately, not a rare event in Ireland.

What should be of much greater concern to the people of Ireland is how this scandal has exposed the lie that financial regulation has been reformed and is now fit for purpose.

Soviet style secrecy and obfuscation are still the principal weapons employed by the Financial Regulator to prevent even the most basic information concerning its activities being made public.

The Financial Regulator claims it carried out an investigation into CHC in 2009 and found nothing more than some supervisory, compliance and organisational issues.

It was only when an outside agent became involved, in this case a company that had bought a section of CHCs business, that the fraud was uncovered.

The failure of the Financial Regulator to detect major fraud within a company that it was, allegedly, investigating raises some very serious questions.

In my opinion there are four possible reasons for this failure in regulation.

1. There was no investigation in the first place and the Regulator is now lying to cover up its failure.

2. There was an old style, pre financial catastrophe investigation. This would involve much drinking of coffee, hours of friendly chat with an occasional glance at some minor aspect of the business under investigation and the compilation of a report that found everything was just hunky dory.

3. Financial Regulator staff are so incompetent that they failed to uncover what Appian Asset Management immediately uncovered on taking over CHCs books.

4. There was a serious investigation and serious fraud was discovered but a cover-up strategy was adopted by the Financial Regulator.

This last possibility is most likely to be the truth.

Irish citizens know, to their great cost, that it is quite common for so called regulators to cover up fraud and criminality within the financial sector.

The DIRT and Ansbacher frauds are just two of the more serious examples of this strategy.

The crucial point arising from this particular scandal is not just that white collar crime is still tolerated by state authorities but that the same old strategies of secrecy and obfuscation are being employed to, effectively, protect the guilty.

Copy to:
Financial Regulator

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