Politics

One thing you can’t fault Charlie McCreevy for is his consistency. The palpitations in the world economy might have exposed his allergy to financial regulation as reckless, yet McCreevy’s faith in unfettered capitalism remains undimmed. Since taking up his post as the EU’s single market commissioner in 2004, McCreevy has repeatedly recited the mantra ‘less is more’. “For far too long the EU has been adopting rules at EU level, simply for the sake of having rules at that level”, he told a conference in Cape Town during 2007. “Once adopted the rules have been left to gather dust on the statute book. My approach is a different one. We should adopt fewer, better quality rules and then devote our energy to making sure they are properly enforced”. Superficially, this appears like McCreevy has been trying to replace the Euro-twaddle of the Brussels elite with the plain-speaking of Kildare racecourses. The truth, however, is that he has gone to enormous lengths to shield some of the most dubious practices in modern finance from oversight. During January, The Financial Times described McCreevy’s approach to hedge funds and private equity as “more nuanced” than those of his direct boss, European Commission president José Manuel Barroso. Leaving aside that this may be the first time the word ‘nuanced’ has been applied to anything advocated by McCreevy, the FT claim is untrue. McCreevy has maintained that hedge funds should be subject to no more than voluntary codes of conduct. He has, however, been pressurised by Barroso into drawing up plans for binding regulation so that they can be formally proposed ahead of the European Parliament elections in June. By arguing that hedge funds can manage themselves, McCreevy is out of sync with a growing body of international opinion. Barack Obama’s nominee as Treasury Secretary Timothy Geithner has signalled that he is in favour of mandatory registration and surveillance in this field. So, too, have Angela Merkel and Nicolas Sarkozy. He has an extremist position and is a full believer in the casino style of capitalism that has now collapsed. McCreevy has maintained that hedge funds play a largely positive role, ignoring how they helped trigger the sub-prime crisis in the US and how they have engaged in shortselling banks on this side of the Atlantic. “I think he is finding it very hard to accept that his beloved unregulated market has failed”, said Poul Nyrup Rasmussen, the former Danish prime minister and now a Socialist MEP. “He has certainly been trying to delay and where possible avoid regulation on hedge funds and private equity. I can’t say what lessons he has learned from the crisis but he does not seem to have changed his dislike of market regulation which is a pity because practically everyone else has realized that better regulation is unavoidable and necessary. I suspect we will encounter further efforts by him to put off regulation”. Some clues as to why McCreevy remains so convinced of the virtues of hedge funds may lie in time in domestic Irish politics. Although hedge funds were banned in Germany until 2004 because their speculative activities were considered too risky, McCreevy had no qualms about welcoming them to Ireland as the country’s finance minister. And by the time their global value was estimated at $2.5 trillion last summer, the IFSC in Dublin stood alongside London and New York as one of the major onshore centres of hedge funds in the world. “Mr McCreevy behaves like a lobbyist for the hedge fund industry,” says Peter Wahl from World Economy, Ecology and Development (WEED), a German anti-poverty group. “He has an extremist position and is a full believer in the casino style of capitalism that has now collapsed”. Once dubbed the most right-wing finance minister in Europe by Proinsias de Rossa, McCreevy has used his platform as a commissioner to identify with the chief architects of market fundamentalism. While his ideological preferences were never really in doubt, he nonetheless chose December 2005 as his ‘coming out’ month. He praised Margaret Thatcher for how she had “economically transformed” Britain. And he quoted Milton Friedman, intellectual guru to Ronald Reagan and Augusto Pinochet, to support his contention that tax competition between nations is healthy. Again, McCreevy finds himself marginalised in holding that view. In December last year, a UN conference in the Qatari capital Doha recognised the kind of tax competition McCreevy favours as a major contributor to global poverty. Obama has also promised to crack down on tax havens. According to the World Bank up to $800 million in untaxed capital leaves poor countries or economies in transition each year, frequently because multinational firms have received tax breaks from the host countries. This dwarfs the $100 billion that such countries receive in annual development aid. Accountancy firms have provided invaluable advice to companies about how they can conceal their profits and thereby evade tax. The four biggest firms with global reach – PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte – have all paid huge settlements in recent times after they were sued for breaching financial rules. Yet they have a staunch ally in McCreevy, himself an accountant by training, who has recommended that the four (joined together in the International Accounting Standards Board) should effectively set the rules that companies listed on the EU’s stock exchanges should follow. This has thwarted moves to introduce the kind of international system that is needed to tackle tax evasion: one where every multinational firm has to state what profits it makes and what taxes it pays in every country where it operates. “Published accounts will always be like bikinis – much more interesting for what they conceal than for what they reveal”, McCreevy has said. “The view that more frequent reporting by companies increases transparency is one about which I am deeply sceptical”. Despite speaking about opaque financial transactions in colourful and accessible terms, McCreevy has snuggled up to a largely unaccountable corporate elite. “The IASB is a private company,” said

The honeymoon is over for Declan Ganley and brand “Libertas”. But the brand‘s keeper, having being carried grinning over the publicity threshold by the sycophantic initial media coverage, is none too happy about it. In fact he seems to be verging on a paranoia which is shared, for example, by one of the latest “successful applicants” to join “team Libertas”. Kevin O’Connell, a former deputy director of Europol, has been taken on board to represent Libertas in the UK. O’Connell was employed by Declan Ganley’s group last year as a “security advisor”, whose role included “vetting staff and potential candidates”, as well as monitoring the press coverage that was becoming of mounting concern to Ganley. Ganley was troubled by what he labelled “conspiracy theories” surrounding his American business contracts and the funding of his Lisbon treaty campaign. O’Connell, apparently unperturbed by any possible conflict of interest, concluded that Ganley, “has been the subject of a sustained and co-ordinated information campaign intended to destroy his political credibility”. “I looked into the matter and was concerned at what I found – and decided that if Libertas would have me as a candidate, I would run”, he added. O’Connell obviously passed his own vetting and was taken on board. This, however, was not the first time O’Connell had been involved with Ganley. As Deputy Director of Europol, O’Connell spoke at Ganley’s First Annual Forum On Public Safety In Europe and North America. The conference, which Ganley has hosted several times, along with the University of Limerick, generally lures big names – Al Gore being the most glittering catch so far. And in between the talks on general defence related issue by such luminaries, Ganley and a host of senior ex-US-military Rivada Network employees, plug their own security-related communications products. O’Connell’s 2007 talk focused on how “the requirements of law-enforcement and public safety professionals are falling behind the potential of the technology” – a theme sweet music to the ears of Rivada’s marketing department. All a happy coincidence? Perhaps. The motivation, however, behind the conferences is not humanitarian but is the real-life actualisation of Ganley’s Entrepreneurial Rules [see next article]. The rules are appropriate, or at least normal, in international commerce. However, Ganley was entering a different battlefield with his new brand “Libertas”, a battlefield where Transparency and Accountability – the toxic Unique Selling Points (USPs), were required. We are now well used to the plummy voice of Declan Ganley railing against the “unaccountable elites” in Brussels and calling for greater transparency. Time and time again Ganley responded to interviewers’ questions as to what he and Libertas stood for: Transparency and accountability, now wrapped in a rightwing social agenda, became an integral part of the brand. The problem with such an USP is that it presupposes a standard of behaviour – in its proponents. And therein lay the start of Declan Ganley’s major problem – the potential seeds of his own destruction. Little did he realise, he was now setting himself up for the scrutiny that he had avoided. And as the Celtic Tiger died so too did blind adulation for the buccaneering entrepreneur. The positive became the probing; mystery was being seen as murk. A few postings on the web had alluded to Ganley’s role in Iraq around the time of the launch of Libertas. But it was after the referendum that the unsightly picture got a fuller, more public unveiling. Ganley was part of a consortium chasing the untapped and hugely lucrative Iraqi mobile phone market. Having failed, he picked himself up and went after a police network. Assisting him was the now-disgraced Alaskan Senator Ted Stevens who had slipped his Eskimo loophole into the Iraqi reconstruction effort. Stevens had introduced positive discrimination legislation to boost the Eskimo economy by allowing non-competitive Eskimo tenders for government contracts: get an Eskimo front going in the heady early days of Bush’s Iraq and you had a one-way ticket to boomtown. The igloo factor was mobilising in the desert. But Declan Ganley wanted a bigger boom for his buck, so he covertly inserted a new clause into the police contract, laying the groundwork to roll out a nationwide civilian network, the very network his consortium had just been refused. Like those he now criticises, Ganley wasn’t taking No for an answer. His covert clause, however, was spotted by vigilant officials. And the contract was rescinded. But the officials, later completely vindicated, were accused by Ganley of corruption and fell foul of his Washington big-hitter allies – forcing their resignation. But Ganley and his partners’ scheming for more money led to a two-year delay in the police network at a very critical time. “During that time thousands of American soldiers and Iraqi police officers were killed, at least some of whom could have been saved had they been able to pick up a phone and call for help”, author T Christian Miller states in his book “Blood Money. Wasted Billions, Lost Lives and Corporate Greed In Iraq”. And in a scathing indictment of unaccountable elites, Miller continues: “The whole episode was a shameful victory of narrow business interests over a vital strategic policy”. Ganley, for his part, denies the contract was revoked and says he walked away due to murky affairs he is unable to elaborate on. Stevens’ Eskimo loophole has continued to pay Ganley dividends through “sweetheart” contracts with the US National Guard and other federal bodies. Not illegal. But the exploitation of positive discrimination legislation is hardly the foundation for his transparency and accountability platform. The platform is further eroded by the fact that Ganley’s wife Delia, using her maiden name, contributes to Senator Stevens. As she does to Senator Mary Landrieu of Louisiana, where Rivada got lucrative communications contracts with the National Guard. Nothing wrong there either. Delia Ganley is entitled to use her maiden name and contribute to these two Senators. But what have both senators got in common? They both chart this year in the Citizens for Good Governance Top