One of the dangers of living in a banana republic where corruption is endemic at all levels of society is the tendency to slip into an ‘Alice in Wonderland’ mindset. An article by Claire Shoesmith in last Friday’s Irish Times about ethics in business serves as a good example of this phenomenon. In making her case, she compares recent financial scandals in America and Ireland. The first thing to notice is her use of language. Ms. Shoesmith describes the Enron and Worldcom scandals in America as:
Corrupt organisations, run by fraudsters who lined their pockets with millions of dollars while destroying billions of dollars of investors’ money’?
In contrast, here’s how she talks about scandals in the Irish financial world:
AIB and National Irish Bank, have played their part in eroding public trust in the financial sector and, in turn, prompted calls for tighter rules on corporate governance and increased scrutiny on individuals within the industry.
So, financial criminality in the US is described as corrupt organizations run by fraudsters while in Ireland stealing millions from the State and customers merely amounts to a factor in the erosion of public trust. Another elephant in the room that remains completely unnoticed is the consequences for the fraudsters when caught.
Ms. Shoesmith gives some examples from the US: Bernie Ebbers of Worldcom: 25 years in jail. Kenneth Lay of Enron: Awaiting trial. Denis Kozlowski of Tyco International: between eight-and-a-third and 25 years in jail. These people, and many others, found themselves in deep trouble because of their corrupt activities. Regulatory agencies, the police, the courts all became immediately involved and made sure these people suffered the consequences of their actions.
In the Banana Republic of Ireland, this does not happen. The examples used by Ms Shoesmith, AIB and NIB, will suffice to make the point. For 17 years, National Irish Bank (NIB) robbed millions from the State and its customers in well organised frauds. When this major criminality was uncovered (by the media), there was no police investigation, no arrests and no mention of trials or jail sentences. Instead, two High Court Inspectors were appointed to investigate. It took them six years, yes, six years to produce a report. The report was greeted with the usual shock and horror and promises were made that this time action would be taken. Nothing happened and the fraudsters are walking free as I write.
AIB has also robbed millions from the State and its own customers with no consequences for the bank or any of its officials. This is not surprising as AIB is allowed to investigate itself with no interference from the police. The bank is even allowed to operate its own internal justice and court system, passing judgements and meting out punishment on any staff found ‘guilty’. The so-called Financial Regulator only plays a peripheral and mostly supportive role in all this.
The term Banana Republic is not used lightly here; it is a true reflection of how things are done in Ireland. The difference between a banana republic and a real democracy can be measured by the action taken when corruption occurs. Let’s just compare the Worldcom and NIB scandals.
Here’s the reaction of Harvey Pitt, chairman of the Securities and Exchange Commission (SEC) to the Worldcom scandal
“I’m mad as hell and I’m not going to take it any more,” “The bubble has burst,”… “Serious jail time awaits serious crime.”
And here’s the reaction of Mr. Denis Kelleher, chief executive of investment company Wall Street Access:
“It is outrageous what is going on,” he said. “It is greed of the highest order. If the system does not put these people in jail, we have failed. If this is the system, we have, we’d better get it right in a hurry, and otherwise we are in deep yoghurt, as they say.
The American system went into action and only three years later, long jail sentences are being served.
It’s over a year now since the NIB report was published and seven years since the criminality was uncovered. So what has happened. Well, a High Court judge decided that the NIB should not be closed down because of the consequences for the bank, its customers and staff. (Just what does an Irish bank have to do to get shut down, genocide?)
Paul Appleby, the State’s Director of Corporate Enforcement tried to obtain the names of the bank’s audit committee with a view to taking legal action. He was firmly told by a High Court judge that
‘There was no real and pressing need for the order sought?’
(Major criminality and we can’t even get names). Last July, Mr. Appleby was back in court in an attempt to get the executives involved barred from acting as directors. He hasn’t a hope.
Will there be criminal prosecutions? No, because any evidence gathered for the inspectors report cannot be used as it was given voluntarily.
Welcome to the Banana Republic of Ireland.
One thought on “Banana Republic”
having ago at bank of irelad
how aer they the government bankers
Comments are closed.