The Financial Times has rightly described Ireland as a banana republic in response to the Anglo Irish Bank scandal. This is part of an ever increasing realisation by the international community that the administration of Ireland is, at every level, rotten to the core.
It is only within Ireland that the reality is denied. It is only within Ireland that a large majority of people including politicians, intellectuals, journalists and business people continue to pretend that Ireland is a normal, functional democracy like any other.
The financial tsunami that’s sweeping the globe is likely to strip away all such pretence and expose us for what we really are – a corrupt nation in denial.
The reaction to the Sean Fitzpatrick scandal and the banana republic editorial in the Financial Times is typical of such denial.
Brian Lenihan, Minister for Finance:
“I don’t accept that claim (Ireland is a banana republic), for one minute; very few countries have been left unscarred by the financial fall-out from the problems initially sparked by US sub-prime lending.
“There is nothing unique in what has happened in this country — and, indeed, we haven’t had all of the failings that have been demonstrated in some overseas banks.”
Actually what happens in this country is unique. No other democracy in the world allows its bankers and other financial institutions to rob customers on a regular basis.
The corrupt and rotten business and political environment in Ireland is, largely, a creation of Lenihan’s party, Fianna Fail.
Shane Ross, Independent Senator:
“It’s a pretty stunning state of affairs.”
Actually it’s not stunning at all. This kind of ‘inappropriate’ behaviour has been going on since the foundation of the State. People like Senator Ross, unfortunately, have an amazing facility for getting outraged, forgetting and then getting outraged all over again when the next scandal breaks. He seems unable to join up the dots and see the reality that the Financial Times can see at a glance.
“What has happened here is a complete collapse of financial regulation…What has the Financial Regulator been doing since he became aware of Fitzpatrick’s loan last January?”
Wrong again Senator; there never was any financial regulation to collapse in the first place. Irish governments and regulatory authorities do not regulate but rather ‘facilitate’ the activities of financial institutions.
Last October, for the first time in the history of the State, an Irish financial institution was fined and that was only because it threatened the interests of other banks.
It’s likely that since last January the so called Financial Regulator has been trying to find a way of getting Anglo Irish and Sean Fitzpatrick off the hook. If it wasn’t for the collapse of the banking system Fitzpatrick would have been allowed to continue with his ‘inappropriate’ activities.
This is exactly how a ‘regulator’ behaves in a banana republic.
Gina Quin, CEO of Dublin Chamber of Commerce:
“I think it’s worth remembering that this wasn’t an illegal practice and you know business gets done between friends all of the time because we like to work with the people that we know and like and we can trust.
And trust is a hugely important feature of Irish business moving forward in the current climate. Trust and confidence are the absolute cornerstones of us pulling ourselves out of this current situation.
…the man has fallen on his sword, his fellow director is gone as well who was involved in one of the loans and we’ve got to move on…this is one small unfortunate incident and its not helping, we’ve got to move on.”
“This is one small unfortunate incident”???
To be charitable to Ms. Quin, she’s young, ambitious and obviously completely ignorant of the rotten reality at the core of Irish public life. I hope that she manages to remain in her comfortable little bubble world interacting with people she likes and trusts.
The regulatory board of the Institute of Chartered Accountants in Ireland said it’s to look at the circumstances surrounding the director loan issue. It wants to know if any of its members was involved.
Recently, this organisation established an ‘independent’ regulatory board (CARB). Clearly, the ICAI sees regulation as a bit of a joke when we learn that they appointed Dr. Liam O’Reilly as chairman of the board of CARB.
During his career as chief executive officer of the Financial Regulator Mr. O’Reilly enthusiastically enforced policies that ensured no financial institution was ever brought to account for fraud or theft. His attitude is unlikely to have changed.
No accountant will be will be made to answer for the Anglo Irish Bank scandal.
The Irish Association of Investments Managers said it’s disappointed at events which have led to both Mr. Fitzpatrick’s resignations and that of the bank’s chief executive officer David Drumm. The association’s members manage 250 billion worth of investments and say they expect the highest level of transparency in dealings by directors of listed companies.
This joke organisation claims to ensure best standards throughout the investment industry. Two names – Jim Flavin, Sean Fitzpatrick.
Mary Hanafin, Minister for Social and Family Affairs:
When Hanafin was asked why couldn’t the Government make such loans illegal she spluttered
“Mmm…, Obviously, all sorts of arrangement and mmm…dealings that banks make, you know, and I think the regulator, the regulatory authority rather is actually looking to see what was behind that and the whole circumstances of it.”
Hanafin went on to talk about the Fitzpatrick scandal as if she was a tourist from Mars and not part of the political establishment that created and supports rogue bankers.
Prof. Ray Kinsella, Director of the Centre for Insurance Studies at the Quinn Business School, UCD:
“This crisis has brought a generation to its knees…the impact on the very fine people working in the bank…the impact on Sean Fitzpatrick himself, I know it’s an unpopular thing to say but I’m uncomfortable with judgementalism and I don’t know all the facts but the impact on the Irish economy and financial system has been devastating.”
The best that can be said of the professor is that he’s a bit of a header (See here). He once suggested that the Irish media should keep quiet about banking corruption as such talk could damage our international reputation. As I say, he’s a bit of a header.
Professor Niamh Brennan, Michael Mac Cormac Professor of Management, Director of Academic Centre For Corporate Governance, UCD:
Commentating on the failure of the Financial Regulator, Patrick Neary, to act on Fitzpatrick’s dodgy activities.
“I had thought it was a member of the staff that had made the discovery and hadn’t escalated to the Financial Regulator himself. But it appears that he knew and I find it absolutely extraordinary that he would have been part of those all night discussions in the Dept. of Finance and told nobody about this finding.”
Professor Brennan is shocked because she, like many others in Ireland, labours under the illusion that the Regulator actually regulates, it does not. The Regulator, the Government and the banks are all in the same camp.
“What we need in Ireland is a robust system of regulation that protects the reputation of the country as a whole and which will be good for our citizens.”
As I have said, the Regulator, Government and the banks work closely together for the good of the banks and against the interests of the country and its people. The completely one sided deal done with the banks makes this fact crystal clear.
Unlike most commentators, including politicians, who immediately and without question accepted the regulator’s opinion that nothing illegal occurred, Professor Brennan believes that Fitzpatrick could be brought to account as follows.
Breach of fiduciary duties where a director puts his own personal interest ahead of the company.
Failing to keep accounting standards by not telling the truth in his financial statements.
Moving the loan was, in Professor Brennan’s opinion, illegal.
Fitzpatrick will never be brought to account for any wrong doing.
Ulick McEvaddy, businessman:
“I’ve seen this corporate madness if you like in a media frenzy to feed off any troubles that an Irish corporation would have.”
“So these people, Sean Fitzpatrick, Bill Barrett, these guys had a different philosophy in life and they to a great extent were, with Charles Haughey, another man pilloried in the media, the architects of this Celtic Tiger.”
My respect for McEvaddy completely evaporated on hearing this drivel. To blame the media for Fitzpatrick’s dodgy activities is bad enough but to defend the corrupt Haughey by claiming he was a victim of a media frenzy is to expose oneself as an ignorant fool of the worst kind.
David McWilliams, Economist and author:
For some time now McWilliams has been telling all and sundry what action needs to be taken in response to the collapse of the banks. But the Government have ignored his very sensible suggestions especially his insistence that the ‘financial delinquents’ who created the mess should all be sacked.
Responding to the dodgy deal done between the Government and the bankers McWilliams uses some colourful but accurate language.
“Recapitalisation is based on the economics of Noddyland.”
“Cronyism of the highest order.”
“Sends a signal to every foreign investor that Ireland is a banana republic.”
“Stroke politics” of Congolese proportions.”
Unfortunately, McWilliams falls down in his analysis when he concludes that Brian Lenihan must be acting under very bad advice.
McWilliams, like so many other experts and commentators, persists in assuming that the Government and the Regulator are acting in the interest of the country when it is crystal clear that they are doing no such thing.
The Government, the Regulator and the banks are all on the same side, all working to an agenda that does not include the best interests of the people of Ireland.
Pat Cox, former president of the European Parliament:
I quote Mr. Cox extensively because his views are so disturbing.
Pat Cox is a highly intelligent and vastly experienced public figure. In addition to serving as President of the European Parliament he has served as an MEP, TD and broadcaster.
It is therefore deeply disturbing to witness him in full denial mode. Effectively, Cox is saying – Nothing illegal was done, Ireland is only a minor player when it comes to financial corruption and it’s just a case of some bad judgement and lax governance.
It’s difficult to believe he’s ignorant of the fact that Ireland is the only Western democracy that protects rather than prosecutes bankers who may be corrupt.
We here at Public Inquiry could quote hundreds of cases of political, financial and government corruption in support of the Financial Times accurate conclusion that Ireland is a banana republic.
Here’s what Cox had to say on the Fitzpatrick scandal.
“You asked the question at the very beginning; what about the comments in the papers about Ireland’s reputation?
If you look at the Tsunami of toxicity and greed that we have seen from Wall Street in all of the collapses and from the City of London, Ireland, I’m not relativising here (he is) but Ireland is really not king pin in this.
So those in the Financial Times editorial board or others who would cast a stone should cast them at glass houses closer to their headquarters at home. That’s the comparative point I wish to make.
Secondly, this week, we’re not discussing for example Mr. Madoff, one of the great guru’s of Wall Street who appears somehow or another by a corrupt scheme of pyramid selling to have maintained a system that finally has collapsed possibly with a debt of $50 billion.
So again, not to relativise, (he goes on to relativise) that’s real and that’s this week and it’s not in one Irish newspaper this weekend and a missing ingredient if we want comparative analysis.
I think the issue of what happened at home is an issue that touches loads of stories this week, it’s a question about people in authority, it’s a question about judgement, it’s a question about standards, it’s a question about transparency and it runs across so many stories in our papers today.
And the question about Sean Fitzpatrick is not one about legality and illegality to do with the bank giving loans. Under Irish company law it is very clear that up to ten per cent of the net assets of a business can be under law loaned to directors. Indeed, prior to earlier this decade up to a 100% could have been loaned.
So, the law is not the issue, the issue is the quality of governance, this is someone who has been the chief executive of one of the burgeoning banking institutions of this state and subsequently since he retired in 2004 the chairman.
And in that regard hiding the loan from the shareholders of his own bank, that’s the first grievous fault before we come to the public in some general prurient or other interest that they may have in this story.
It wasn’t leveling with shareholders and I only ask the question – Why not. It wasn’t illegal as has been said so why not tell it. So, there are people in the bank who made personal judgements not only one but several that it was ok in governance terms to hide this truth from their own shareholders maybe or not from their own auditors and they did it over consecutive years and it begs the question why.
Sure, not illegal but certainly well below the standards of good judgement and good authority and confidence is one of the missing ingredients in the global banking system today and in the Irish banking system and this is another heavy weight on those whose shoulders should bear the responsibility including our regulatory system.
The cosy capitalist bit or the Irish bit that I find quite disturbing is that those who have been invited to regulate appear themselves to be asleep at the wheel and so those who are there to look out for a stakeholders interest, whoever it may be, appear to have produced a less than acceptable performance and I find it really interesting that several of the newspapers today report our finance minister Brian Lenihan as not offering directly his confidence in our regulator saying this is a matter for the board and not for him.”
The Financial Times is correct, Ireland is a banana republic. It is a corrupt state not just because of the extent of corruption throughout every level of society but more critically because of the complete failure of state agencies, including the body politic, to take effective measures to root out the disease.
This inaction has led to the State itself becoming a corrupt entity which in turn has created an environment where politicians, businessmen and many others in privileged and powerful positions can, with supreme and justified confidence, break the law with impunity.
This is the crucial difference between Ireland and other Western democracies. When corruption is uncovered in countries like America, England and France, for example, there is an immediate and robust response from well funded, professional and independent enforcement authorities. This does not happen in Ireland.
Ireland’s reputation will continue to be damaged for so long as politicians, journalists, intellectuals, business people and the bulk of ordinary Irish citizens continue to deny the reality of the situation.
Brian Lenihan, Minister for Finance
Shane Ross, Independent Senator
Gina Quin, CEO of Dublin Chamber of Commerce
Institute of Chartered Accountants in Ireland (ICAI)
Irish Association of Investments Managers (IAIM)
Mary Hanafin, Fianna Fail TD and Minister for Social and Family Affairs
Professor Kinsella, UCD
Professor Niamh Brennan, UCD
Ulick McEvaddy, businessman
David McWilliams, Economist and author
Pat Cox, former President of the European Parliament